Mish on Magic

"No modern American president would repeat the fiscal mistake of 1932, in which the federal government tried to balance its budget in the face of a severe recession. The Obama administration will put deficit concerns on hold while it fights the current crisis. But even as Washington tries to rescue the economy, the nation will be reeling from the actions of 50 Herbert Hoovers--state governors who are slashing spending at a time of recession, often at the expense of their most vulnerable constituents and of the nation's economic future. These state-level cutbacks range from small acts of cruelty to giant acts of panic--from cuts in South Carolina's juvenile justice program, which will force young offenders out of group homes and into prison, to a decision by a committee that manages California state spending to halt all construction outlays for six months. ... They're cutting back because they have to--because they're caught in a fiscal trap. ... Think about it: Is America--not state governments, but the nation as a whole--less able to afford help to troubled teens, medical care for families, or repairs to decaying roads and bridges than it was one ortwo years ago? Of course not. ... Why can't we keep doing good things? ... An educated populace is a national resource. Why, then, is basic education mainly paid for by local govenments, which are forced to neglect the next generation every time the economy hits a rough patch", my emphasis, Paul Krugman at the Houston Chronicle, 31 December 2008.

Michael Shedlock has a 2 January 2009 post about "something for nothing ideas", which exposes much of what appears to be economic "thought" as nonsense, link: http://www.globaleconomicanalysis.blogspot.com/2009/01/how-something-for-nothing-ideas-become.html. Mish's conclusions are: "Those with money control policies in Congress. ... Inflation (expansion of money and credit) is a stealth tax (theft), demolishing the middle class over time. Inflation allows the government to collect more every year in property taxes, sales taxes, income taxes, etc., typically to pay for war mongering and social redistribution activities. ... Academia is a breeding ground for socialists. ... People want to believe someone is in charge. ... People want to trust the experts. ... There is an overwhelming propensity by everyone to seek something for nothing".

PK is a Nobel Prize winning economist. Read the bold items. This looks like emotive rhetoric to me, not economic arguments. PK uses his notoriety to advocate policy. Did PK ever find a spending program he did not like? PK is not concerned about being cruel to savers. He should advocate the "euthanasia of the renter" and get on with it. I think PK knows he advocates this, he just more highly values "his people", i.e., tax recipients than savers. PK has contempt for federalism and people's freedom to move to avoid taxation. Look at California. At present trends by 2030 only two classes (Marxist term) will live there: Hollywood movie stars and illegal aliens and their progeny. I suspect California wil be bankrupt long before then. "The nation as a whole" means who good professor? Who gets, who pays? What are these good things? Seizing people's savings through interest rate suppression? Taxing the productive to support the unproductive? Abraham Lincoln said something about this, my 30 November 2008 post: http://skepticaltexascpa.blogspot.com/2008/11/more-good-news.html. Federalize everything is PK's answer and he will decide where to spend the money. "National resource"means what PK? If it is, does that mean Uncle Sam owns that resource and we should repeal the 13th Amendment? PK's rhetoric sounds like Jeffrey Garten's, here:

Compare Mish's comments to those of PK.