I get his columns from time to time. Since he is an important element in the leftist propaganda machine, I think it worth taking a moment or two from time to time to deconstruct the patent idiocies, and subtle deceptions which characterize his work, and which characterized his ideological forebears: John Galbraith, John Maynard Keynes, George Bernard Shaw, Karl Marx, Robespierre, and the Marquis de Sade. The task is to leave the world in flames, but since most people find that idea objectionable, for whatever reason, they have to be sneaky.
The task which Keynes set for himself was the transfer of all wealth, power, and means of production to the State. The means of doing this was, proximately, investment in public works projects which caused long term economic harm, in ways I have discussed over the last week or so.
In this weeks column, he is arguing against German cuts in spending. As he says (to them, in an imagined debate which will never happen):
budget cuts will hurt your economy and reduce revenues.
Let’s ponder that for a moment. He slips things like that in. Skillful illusionists draw attention to one place, while the movement happens elsewhere. The spirit behind it is very much Nancy Pelosi’s “unemployment benefits create jobs”. No they don’t.
What he is saying is if the German government spends less money, they will collect less in taxes. Let me repeat that: if they spend less money, they will collect less in taxes. This means that he is positing that for every dollar spent, some amount at least equal to that amount comes back, and presumably more. Moreover, that this process is sustainable. That we should be doing this year over year.
Logically, if deficit spending pays for itself–it one dollar spent yields one dollar in the coffer–then deficits would not be deficits: they would be funded. This would imply private sector job growth, though, which is not attained through government spending, as I will discuss in a moment.
It is reasonable to suppose, though, that as you spend more, you get more back.
Let us say this supposed “ricochet” effect is real, which to some extent is indubitably the case. $100 billion collected and spent gets $80 back. $200 billion collected and spent gets $150 billion back. In the second case, tax receipts have in fact increased. His “theory” has been proven true. Yet in the first case the net debt increased $20 billion, and in the second it increased $50 billion, AND THIS PROCESS WILL CONTINUE INDEFINITELY AS LONG AS MORE IS SPENT THAN COLLECTED. Moreover, the amount of taxes that need to be collected to maintain a steady state condition will go up steadily as interest payments on the national debt.
The simple, ineluctable fact of the matter is that only people in the private sector create jobs which pay taxes in a sustainable way. You can borrow and spend money, and create illusory wealth, but all that is happening is you are getting back some percentage of what you spent, that is LESS than the total.
Take unemployment benefits. You have Hans Schmidt sitting on his duff, collecting a check every month. He uses that money to buy groceries, pay his rent, make his car payment, and to buy beer. These benefit the grocery, landlord, car and beer businesses, AS LONG AS THE MONEY KEEPS COMING. Cut off the money, you put pressure on all those same businesses, to the extent that they depended on Hans getting his check for the government.
But if they depended on that check, then they were never really independent, sustainable enterprises in the first place. Just like Hans, they are really dependents on the government, aren’t they? The government is a big old Sugar Daddy, that will feed you as long as you play ball.
This is not health. This is illness. It is unsustainable. And Keynes/Krugman don’t want it to be sustainable. They want it to collapse, eventually, from the weight of the contradiction.
The Germans recognize this. The Tea Party movement in this country recognizes this. Adam Smith was on the mark when he said, roughly: “what counts as common sense in personal life can scarcely be unwise when deployed more widely.”
You can’t spend borrowed money forever. How hard is that to understand? You can’t live beyond your means forever. You can live well, for a time, but bills come due.
It’s not commonly known, but interest payments on our national debt will surpass our expenditures on national defense within ten years.
Krugman keeps invoking the era in which Socialists finally got their way here–the late 30’s. Obama was supposed to be FDR. It hasn’t worked out, but a playbook predicated on deception can only have so many plays. Go too far, and people get wise. That is what has happened here, and apparently there.
This is what we need to do, in my opinion. This is the counter to the schemes of fools, liars and villains.