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Source link: http://archive.mises.org/13522/paul-krugman-the-state-is-our-light/

Paul Krugman: The State is Our Light

August 9, 2010 by

I always thought that Paul Krugman was into state worship, but his column today goes even further. The State is our Very Light and without it, our lives are meaningless. Our own salvation depends upon the willingness of politicians to yank resources and property from the rest of us and “spend” it in the proper way.

In my own blog, I take on this religious viewpoint.

{ 43 comments }

Old Mexican August 9, 2010 at 12:57 pm

That Krugman article is especially bad. He first comes with the wrong assumptions and then makes a conclusion that has NOTHING to do with the assumptions! The man is a quack of the first order (which is not, by the way, a good thing.)

Richie August 9, 2010 at 3:32 pm

Sounds like “michael”.

Bruce Koerber August 9, 2010 at 1:09 pm

Dimwitted Krugman Talks About The Unlit Road To Serfdom.

Paul Krugman “is on the unlit, unpaved road to nowhere.”

“Unlit” – in the dark secrecy of the counterfeiting operation the Federal Reserve prints funny money to redistribute wealth to the unConstitutional coup and its benefactors.

“Unpaved road to nowhere” – must be referring to the Road to Serfdom! That is surely a nowhere destination and the destruction caused by such Keynesian socialism/fascism will make it seem like we are traveling on an unpaved road if we go in that wretched direction.

Do not follow the directions of Krugman, he is a propagandist and an economic imbecile.

Franklin August 9, 2010 at 1:31 pm

It’s nothing new from him, so no need to feel indignant. Heh, I ought take my own advice.

“It’s the logical consequence of three decades of antigovernment rhetoric, rhetoric that has convinced many voters that a dollar collected in taxes is always a dollar wasted….”

If voters are convinced of this, then why in the past three decades (actually going on three centuries) has the size of government grown steadily per capita?
If I am incorrect in this assumption, please advise.
(And nonsense rationalizations that try to distinguish between, say, war-spending and flood relief are not welcome. Government spending is government spending.)

Magnus August 9, 2010 at 1:38 pm

When we save a schoolteacher’s job, that unambiguously aids employment; when we give millionaires more money instead, there’s a good chance that most of that money will just sit idle.

Two points:

A. What do you mean by “we,” Kemosabe?

B. Idle? Really? Excess cash (i.e., savings) in the hands of anyone, even millionaires, is where investment funds come from. That’s called capital, Mr. Economist, as opposed to the nearly-instant consumption that occurs when the same cash is forcibly placed in the hands of so-called “teachers.”

michael August 10, 2010 at 5:37 pm

Magnus: Isn’t it true that we have such an oversupply of investment funds that periodically we watch multiple trillions of the stuff go up in flames? Isn’t it the case that little of it does any actual work any more, such as funding startups and expansions? Because now that consumer purchasing is down, isn’t soft demand making much of the capital investment we already have redundant?

The wealth represented by already invested capital is shrinking. Plants and retail chains are closing their doors. Innumerable new housing developments and commercial ventures are now ghost towns. Some are even being torn down. Now is not the time to be waving the flag for more investment funds.

Goverment printed the money we all use for our own convenience. It now needs to take it back and reissue it where its deployment will have a more beneficial impact on society. ALL of society, not just the winners of the last round of activity.

It’s not “our” money. We just get to use it when we do business here.

Magnus August 9, 2010 at 1:50 pm

It’s the logical consequence of three decades of antigovernment rhetoric, rhetoric that has convinced many voters that a dollar collected in taxes is always a dollar wasted, that the public sector can’t do anything right.

Government dollars are worse than merely wasted. Burning them would do less economic damage than spending them. If they were burned, at least you would not displace private enterprise, you would not encourage people to look to government to solve problems it is incapable of solving and can only worsen, and you would not generate the wealth-destroying aggressive violence that government is uniquely employed and constituted to provide.

Government spending is only ever used to pay for things that no one in his right mind would voluntarily pay for. We know this is absolutely and necessarily true, because if such goods or services were being provided privately, then government would have no reason to take that money and spend it, since that good or service would already exist. Government could replicate private spending, even if it wanted to, which it doesn’t. Government spending is therefore a perfect map of the things that people DO NOT WANT to pay for.

Amanojack August 10, 2010 at 9:26 pm

Your last paragraph is excellent!

P.M.Lawrence August 11, 2010 at 11:56 pm

Government spending is only ever used to pay for things that no one in his right mind would voluntarily pay for. We know this is absolutely and necessarily true, because if such goods or services were being provided privately, then government would have no reason to take that money and spend it, since that good or service would already exist. Government could replicate private spending, even if it wanted to, which it doesn’t. Government spending is therefore a perfect map of the things that people DO NOT WANT to pay for.

No, because governments are actually doing something else wrong too – crowding out. Krugman is technically right in part of his “…services that everyone except the very rich need, services that government must provide or nobody will, like lighted streets, drivable roads and decent schooling for the public as a whole”, but he is leaving out the fact that many people who could and would pay for these things privately, like education, actually can’t because they’ve got governments on their backs taking away their personal resources with taxes etc. A lot of government spending is therefore nota perfect map of the things that people do not want to pay for, as much of it is a map of things they do want to pay for but which it prevents.

Of course, putting things right would involve transitional problems in avoiding taking away the government version before the private version was in place, and there are actually some externality issues that justify assisting providing these services (e.g. network externalities from having a certain level of educated people around, and survival issues for the poor while externalities push down employment and/or wages). That assistance comes out in the wash with the government version, but of course it would be better provided by subsidising the private version, and best of all by taking away the burdens that push individuals down so they need those countering subsidies (I’m mostly thinking of the structural incentives for unemployment, downsizing and outsourcing here – market imperfections all, and all needing sound transitions to get rid of).

Walt D. August 9, 2010 at 2:03 pm

It’s the logical consequence of three decades of antigovernment rhetoric, rhetoric that has convinced many voters that a dollar collected in taxes is always a dollar wasted, that the public sector can’t do anything right.
Historically, more like a $1.25 wasted – Congress always overspends. (Currently it is at least $1.50 wasted).

Daniel Coleman August 9, 2010 at 5:46 pm

Not to mention the opportunity cost, which is (unfortunately) unseen and cannot be calculated.

Nile August 9, 2010 at 2:07 pm

I think I popped a few brain cells trying not to cackle at this… oh, if only half of what he says was really happening.

Ohhh Henry August 9, 2010 at 2:52 pm

Ugh, try reading the comments attached to the editorial which express hearty agreement with Krugman.

All it takes is one or two days time spent in Western Europe, or Japan, and then it will hit you like a ton of bricks upon your return, depending on how you get home from the airport.

Just back from Norway where I had an opportunity to ride beautiful trains that don’t shake and have decent seats

It’s time to finally undertake some comparative government study and analysis. For example, US & Scandinavian nations (eg. Sweden-Denmark-Finland-Norway). Focus must be on what they’re doing *right* and why.

Those “great” places are completely bankrupt and living on borrowed time. Why do people think that it’s a disaster for an individual or a family or a company to borrow money indefinitely without paying any of it back, but it is a respectable, civilized and eminently practical policy when pursued collectively by a large group of people living in a specific geographic area?

Then, there are the even more numerous buffoons commenting to Krugman, who insist that voting Democrat or Republican will either hinder or cause the collapse of the empire.

I didn’t read more than a fraction of the comments, but I think that this one takes the cake.

The reality is unlimited economic freedom for the pursuit of wealth has to be stopped. Therefore, tax rates need to hiked significantly to stop the inequity in society. The private, unlimited wealth of ultra-wealthy cannot properly allocate resources better than the public sector. Therefore, we need to have a progressive tax base and everybody has to pay for services that government offers to the people.
Recommended by 405 Readers

I’ve seen enough. If you haven’t done so already, it’s time to start taking steps to protect whatever wealth and earning ability that you have. It’s also time to start thinking and planning on how to keep your children out of whatever murderous, career-robbing, government “service” program that the feds are going to come up with. There is an ignorant, angry army of fools forming up and they’re going to elect the biggest psychopaths they can find as their generals. Stay out of the mob and stay very, very far away from the pointy ends of their pitchforks.

J. Murray August 9, 2010 at 3:15 pm

Or just play the game out of pure survival, become a tax vampire instead. You can still fight for the cuts and return to sound money, but you do have to put your own interests first. It’s hard to win the fight on an empty stomach.

This is kinda what I tell people when they accuse me of promoting libertarianism out of pure self-interest. It doesn’t matter what kind of system is in place, I’ll thrive in it no matter what. I’m not a person who rolls over and dies and I don’t have a silly notion of honor. I don’t care about being called a hypocrite. It’s better to be a hypocrite than be tramped upon.

I don’t care if it’s a libertarian society, a totalitarian dictatorship, or anything in between. I’ve become accustomed to this standard of living and will keep it. I support libertarianism for the best of everyone else. No matter what system of government exists, or not, there will always be those who have resources at their disposal.

I just tell them, “Sure, enjoy your trains, but when the only thing you can do with those trains is go home to your 300 square foot hovel, don’t complain to me. I’ll still be living the same way I do now. All you did was throw your own prosperity into the fire. Mine is secured no matter what happens. And do you know why? Because I don’t whine and complain when things aren’t going my way. The true irony is that the libertarian is the best suited to become the master under a dictatorship.”

Ken August 9, 2010 at 3:44 pm

Holy Petunia, the naked aggression in the last cite is mind-boggling, and it’s not even directed at my demographic (I was going to say it wasn’t directed at me, but it most certainly was, whether Thugman intended it that way or not). A body could just about invoke self-defense.

Ohhh Henry August 9, 2010 at 3:30 pm

Or just play the game out of pure survival, become a tax vampire instead.

Do what you like, but I say, stay out of the mob. It is going to be dangerous place. Did you ever hear of purges? And who has the best long-term survival chances, a vampire who spent his time and energy learning how to polish his superiors’ apples in the government? Or someone who stayed as far away as possible from that game, learns as many real-world skills as possible, and most importantly who cultivated strong and lasting relationships with other people with real-world skills.

When vampires can’t find enough warm bodies to suck blood out of, they die.

The true irony is that the libertarian is the best suited to become the master under a dictatorship.

Makes no sense. “The best duck is the one that weighs 250 pounds, has no feathers and hunts deer in the forest.”

J. Murray August 9, 2010 at 3:39 pm

It makes perfect sense. Who best to survive under any political regime than the one that can fend for himself?

All of life is a game. It’s wise to play by the rules while trying to change them from the inside. It’s more effective to undermine the system subtly from the inside than shout at the walls.

Franklin August 9, 2010 at 5:16 pm

Does not Krugman do that all the time, by his utterly stupefying anti-sense? I mean, one ought to think he was a plant, a secret agent funded by the so-called “right,” employed to write gibberish so that anyone with eyes to see the emperor’s clothes can recognize the sheer preposterousness of his hypotheses. Look, he’s yet again shamelessly bill boarding more nonsense and this certainly must provoke enough disgusted head-scratching by most readers.

“When we give millionaires more money instead, there’s a good chance that most of that money will just sit idle….”
And this is a Nobel prize winner. Oh, my word. Talk about the unbridled hubris and just the startling kahonas — to make such a statement, to have no fear of being publically ridiculed over the unsound and illogical wordplay. So who knows, perhaps this was the “inside job” – the ostentatious lecture bordering on Swiftian satire, designed to awaken the electorate. I can just hear them now — “Wow, this is ludicrous. What the hell are these government apologists thinking?” And then critical mass attainment will finally unravel the ill-begotten fabric, once and for all….

Indeed. After two centuries what has continued to sprint forward, without pausing for even a breath, is the relative size of the state — government largess, government spending, government borrowing, government looting.

After more than two centuries, relative to economic reasoning, I see no evidence that even a hint of success was achieved via “undermining of the system subtly from the inside.”
Unfortunately.

Madhusudan Raj August 9, 2010 at 5:05 pm

Someone should definitely gift Matt Ridley’s, The Origins of Virtue: Human Instincts and Evolution of Cooperation to Krugman.

I just quote the relevant passages here: “The second lesson of the Yir Yoront (the Australian aboriginals) story is that there is nothing modern about commerce. For all the protestations of Karl Marx and Max Weber, the simple idea of gain from trade lies at the heart of both modern and the ancient economy, not the power of capital. Prosperity is the division of labour by trade; there is nothing else to it. Thousands of year before Adam Smith and David Ricardo were born, human beings had discovered this truth and were exploiting it. The Yir Yoront were, as Rousseau and Hobbes would both agree, in a ‘state of nature’. Yet no despotic monarch had imposed a social contract on them, as Hobbes thought necessary; and nor did they live in social bliss, as Rousseau fantasized. On the contrary, trade, specialization, the division of labor and sophisticated system of barter exchange were already part of the hunter-gathering life……Trade is the precursor of politics, not the consequence…..Government, Law, Justice and politics are not only far more recently developed than trade, but they follow where trade leads”, (pp. 199-202).

Ken August 9, 2010 at 9:37 pm

Absolutely right. How could it be otherwise? The heterogeneous distribution of capabilities is so blindingly obvious as to scarcely rate mention. What arrangement other than division of labor and exchange would anyone expect to follow from that? Yet anything other than individual-level autarky is treated as a consequence of false consciousness, or something.

RTB August 9, 2010 at 9:27 pm

Maybe this is a good sign. This is so blunt, so blatant, so childish and so full of so many bald faced lies it can’t be anything but pure, utter desperation.

Marc Sheffner August 9, 2010 at 9:41 pm

“The lights are going out all over America — literally. Colorado Springs has made headlines with its desperate attempt to save money by turning off a third of its streetlights…
Meanwhile, a country that once amazed the world with its visionary investments in transportation, from the Erie Canal to the Interstate Highway System, is now in the process of unpaving itself: in a number of states, local governments are breaking up roads they can no longer afford to maintain, and returning them to gravel.”

The spooky similarities with Ayn Rand’s fiction “Atlas Shrugged” grow in number by the week.

Ned Netterville August 9, 2010 at 10:04 pm

This article, for Kurgman, makes sense. He’s been flacking for more spending by the government and more money creation by the Fed, primarily to cure unemployment. Unemployment brings great suffering to the unemployed. Krugman cares, he’s a progressive. (Progressives are not motivated by self interest; they care, for the poor and unemployed, not themselves.) Obama listened to Krugman. Obama cares. So Obama’s government spent like a drunken sailor, reminiscent of George Bush, only more so. Bush cares. But it didn’t work. The unemployed remain unemployed. What to do? Call for more spending of course. This is an unimpeachable call. When depression-like unemployment continues, the problem is manifest. Not enough spending. Krugman can and will say, “I told you.” So, how much is enough? Krugman told us this too, in a column published back in November 2008 urging Obama to emulate FDR and go big. Hese’s what he said:

“What saved the economy, and the New Deal, was the enormous public works project known as World War II, which finally provided a fiscal stimulus adequate to the economy’s needs.” (http://www.nytimes.com/2008/11/10/opinion/10krugman.html(

What we need then is an enormous public-works project, a fiscal stimulus adequate to the economy’s needs. What we need is World War III. If Obama reads Percy Graeves PEARL HARBOR, THE SEEDS AND FRUIT OF INFAMY, he will learn how Roosevelt baited Japan into bombing Pearl Harbor to get WWII going and relieve the Depression-era unemployment, which had become permanent with the New Deal. Obama wont miss the fact that Roosevelt’s tactics earned him four terms in the White House. Obama should take Krugman to heart, and follow suit. A draft, a fired-up military-industrial complex, and the affects of combat mortality will quickly relieve unemployment and allow the nation to realize the Keynesian nirvana known as full employment.

Walt D. August 10, 2010 at 11:17 am

“So Obama’s government spent like a drunken sailor.”
Not exactly – as Ronald Reagan once said, “This is an insult to drunken sailors – drunken sailors spend their own money!”

Karl Pukeman August 10, 2010 at 3:45 pm

Drunken sailors get their money by stealing it from other people. If you resist, they bomb you.

guard August 10, 2010 at 2:08 am

What I find interesting is the allusion to worship. One of the most thoroughly censored messages is the gospel message: the kingdom of god is at hand. Jesus’ message is primarily a political one. A kingdom is a government. (duh) We should stop pretending: the common attitude toward the state is worship. Just look at the irrationality involved and it should be obvious.

Dave Albin August 10, 2010 at 3:42 pm

Just like with the church of global warming – the congregation not only believes the priests without question, but engages in worship-like behavior towards the Earth. Communal or group behavior tends to move towards the set-up of classes, in which the lower classes quit thinking and blindly worship the upper classes… Interestingly, people really are like sheep (which, of course and ironically, is a concept with religious roots).

dula August 10, 2010 at 3:00 am

This is an unimpeachable call. When depression-like unemployment continues, the problem is manifest.

Seattle August 10, 2010 at 7:39 am

Krugman was only one letter off: The State is Our Blight.

Bogart August 10, 2010 at 8:19 am

I am somewhat interested in the ideal that Krugman and others actually believe this stuff they say:
1. That humans can create wealth (More stuff, planes, cars, hospitals, computers, chairs, clothes, etc) that people desire by printing little pieces of paper or even easier by typing keys into a computer.
2. That 536 people with no qualifications than they have one or move votes than someone else can manage an economy of hundreds of millions of people interacting with several billion other people.
3. (My personal favorite) Have 1 above be absolutely true and think that it is bad because it reduces some employment.

Frank G August 10, 2010 at 10:13 am

I find most of the comments following his article far more frighting then even Krugman’s words. What the left fails to understand, and it seems that history is replete with the same mistake being made by the left every time they push egalitarian economics, is that what drives the creation of wealth is that one can actually keep the wealth they create. What thinking person would buy a lottery ticket if they knew that if they win the jackpot, that they would be expected to share their winnings with society at large? Even worse, they would be told to hand their winnings over to a 3rd party that will decide for them. My guess is very few tickets would be sold and the lottery would go bust. The left cannot understand that the wealth they seek to redistribute would never have existed in the first place had those that accumulated it believed that it would have been redistributed. The issue the government is creating by its insane love affair with Keynesian economics is that no one is going to risk all that much capital or effort, when they beleive that at some point government, becuase of its out of control finances, will have no choice but to come take away any profit they may realize.

Economic Profanity August 10, 2010 at 12:48 pm

I am surprised no one has dumbed Krugman’s article down a little bit, if you take out the theatrics what you get is something like this:
1) Raise taxes (High unemployment rates and a country struggling to recover…nothing helps like taxes?)
2) Sell Bonds with a low interest rate – (you still need to pay back the principle eventually….and it is not the government’s money that pays interest or principle payments back, as they don’t have their own money)
3) Tax the richester more: (the top 2% already pay the majority of the taxes…and nothing forces a rich person to leave the country or stop earning an income like taxes)
4) Give a teacher a job, and we create a job ( Very true Mr. Krugman, but keep in mind if you pay someone to dig a hole and fill it back up, you’ve also created a job…doesn’t mean the economy is any better by “giving” these jobs away)
5) Give millionaires more money and it will sit idle…(I didn’t know you got rich by letting it sit idle…I would think they’d invest it in mutual funds, or in private investments…but no…Krugman seems to think rich people like to sleep on their money?)

Sylvester McMonkey McBean August 10, 2010 at 1:47 pm

Cocky adj; Overly self assertive or self confident
example: Paul Krugman

Having read other responses to Krugman’s article, I am surprised no one has removed his theatrics and dumbed his article down to his key points:

1) Krugman says: Raise Taxes!

Sylvester McMonkey McBean says: Raising taxes when the economy is struggling with high unemployment and a slow recovery helps?…..odd..I could have sworn you had a PHD in economics but then how could you have forgotten that lowering taxes increases consumption and investment?

2) Krugman says: Sell Bonds to finance debt….why not when the interest rates are so low?

Sylvester McMonkey McBean says: You still need to pay back the principle…and if you spend you borrowed….you can’t…you end up borrowing more..

3) Krugman says: Tax the richest more: they can afford it!

Sylvester McMonkey McBean says: They can afford it, but we can’t! The top 2% of income earners already pay the large marjority of the nation’s taxes. Nothing scares away rich people like high taxes. They will leave, or they won’t come….though I favor less taxes all around, if you really want to punish the rich, tax consumption more, AT LEAST they won’t stop producing that way.

4) Krugman says: Give a teacher a job, you create a job.

Sylvester McMonkey Mcbean says: I’m glad your PHD has taught you such a difficult concept. Did MIT also teach you that paying someone to dig a hole and fill it back up also creates a job? Let’s pay for every unemployed person to gain the necessary credentials to teach, and then give them all jobs! Krugman has solved unemployment!

5) Krugman says: Give millionaires more money (tax them less) and it will sit idle.

Sylvester McMonkey McBean says: I didn’t know millionaires didn’t invest in mutual funds, stocks or bonds? Which subsequently reaches companies, who invest and higher more employees. I guess millionaires sleep on piles of money and never invested in a new company. O Mighty Krugman, enlighten me more.

Always a smart ass,

Sylvester McMonkey McBean

Sylvester McMonkey McBean August 10, 2010 at 1:48 pm

Please visit my new blog and await new posts!

Karl Pukeman August 10, 2010 at 1:51 pm

The government doesn’t even need to raise taxes. It can just crank up the printing presses, which has the added benefit of creating jobs in the printing press industry.

Demand is good because it creates its own supply and consumption boosts demand. So we should cannilbalize all capital goods to boost consumption.

Profit is evil because the econpmy is a zero-sum game. So the government should steal all profits and redistribute them to the victims.

Magnus August 10, 2010 at 2:52 pm

I feel the need to mention once again just how profoundly stupid, amateurish and just plain silly it is for Professor Wonderful to say that untaxed cash is less beneficial to the economy than yet another teacher’s paycheck. Because that money will “sit idle.”.

IDLE!!! It will SIT IDLE! he says.

I knew Krugman was a hack and a fraud, but I’ve read smarter economic comments than that on YouTube. Crikey.

Karl Pukeman August 10, 2010 at 3:50 pm

“IDLE!!! It will SIT IDLE! he says.”

That’s right. Giving money to people who need it is a way to pump money into the economy and boost consumption. Rich people don’t need money so they just hoard it and make everyone else poor in the process. The government can end poverty by printing lots of money and giving to each according to their needs.

GUILT August 10, 2010 at 5:12 pm

Why should we even give people what they need? Just strip them down and send them all off to the salt mines.

Walt D. August 11, 2010 at 12:06 am

“yet another teacher’s paycheck.”
Cash for Flunkers ?

Ned Netterville August 10, 2010 at 9:00 pm

KARL PUKEMAN, Aren’t you a tenured professor of economics at Princeton too, you sly ole fox you?

GUILT: NO! Don’t be heartless. WE should give them everything they need to satisfy their basic needs. WE are a rich country. WE are wealthy people. WE can afford to succor our less fortunate brothers. WE should be like the Good Samaritan……Well not exactly like the Good Samaritan, because the Good Samaritan tended to the needs of the man who fell among robbers by pouring HIS OWN wine on the man’s wounds and dressing them with strips of cloth from HIS OWN clothes, and put him on HIS OWN donkey, and providing the poor soul with room, board and after care until he was well enough to care for himself at an inn, which the Samaritan paid for with HIS OWN money, the dolt. WE, on the other hand, have access to unlimited amounts of OPM. What’s opium, you ask? OPM: it sounds like opium, is equally addicting, it stands for OTHER PEIOPLE’S MONEY, which WE can think of as OURS because were progressive thinkers and communitarians.

B August 10, 2010 at 9:12 pm

I try to understand Krugman, but it’s difficult sometimes. Krugman is decent at exposing Republicans – a fairly easy exercise nowadays – but he just can’t extend this to Democrats. His views on government are too unrealistic. It’s like reading an argument from a sociologist professor from the 1950′s. That’s not good, folks.

I wish that he would just stick to international trade theory. Even if you disagree with him on that topic, he was at least interesting.

mikey August 12, 2010 at 12:23 pm

I’d hang out with Krugman for 1000 dollars a day.

andy bell September 18, 2010 at 11:33 am

I agree he is stuck in the 50′s and 60′s on his thinking.

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