Paul Krugman and Potemkin jobs

For those readers under 40 (and I know I have at least one), let me open this post by explaining what a Potemkin Village is.  The story goes (and it is a story) that when Catherine the Great traveled through late 18th century Russia, her lover and go-to guy Prince Gregori Potemkin would hasten to the villages on her itinerary in advance of her entourage.  Once at these villages, which were poor, primitive and begrimed, Potemkin would hastily throw up shiny facades to dazzle the eyes of Catherine and her court.  A Potemkin village, therefore, is a meaningless facade that fails to address a system’s underlying failure.

Paul Krugman is a worthy successor to Prince Potemkin.  In his most recent New York Times’ opinion piece, Krugman bemoans the fact that everyone (read:  Republicans) is wrongly whining about the deficit when what the the government should actually be doing is getting out there and paying people to work.  Really:

I don’t mean to dismiss concerns about the long-run U.S. budget picture. If you look at fiscal prospects over, say, the next 20 years, they are indeed deeply worrying, largely because of rising health-care costs. But the experience of the past two years has overwhelmingly confirmed what some of us tried to argue from the beginning: The deficits we’re running right now — deficits we should be running, because deficit spending helps support a depressed economy — are no threat at all.

And by obsessing over a nonexistent threat, Washington has been making the real problem — mass unemployment, which is eating away at the foundations of our nation — much worse.

That’s pretty impressive, isn’t it?  Krugman, in an amazing feat of pundit prestidigitation, manages to be both Potemkin and the Wizard of Oz combined in a single package of ideological foolishness.  Like the Wizard telling Dorothy to ignore the man behind the curtain, Krugman has proudly announced that a deficit that threatens to turn the U.S. into Greece is meaningless.  And then, just like Potemkin, he urges us to create nonexistent jobs to fool the eye into believing that our threadbare economy is actually robust.

Krugman achieves this two-fer of economic duplicity by claiming that the Republicans’ nine months as the majority in the House, during which time they’ve been trying to rein in government spending, has in fact worsened the job situation:

Although you’d never know it listening to the ranters, the past year has actually been a pretty good test of the theory that slashing government spending actually creates jobs. The deficit obsession has blocked a much-needed second round of federal stimulus, and with stimulus spending, such as it was, fading out, we’re experiencing de facto fiscal austerity. State and local governments, in particular, faced with the loss of federal aid, have been sharply cutting many programs and have been laying off a lot of workers, mostly schoolteachers.

No, Paul, wrong again!  The past year has actually been proof, not that Potemkin jobs will save the day but, instead, that, if the government is the only employer, when the government runs out of money, the jobs vanish.  All that will happen if the government follows Krugman’s plan and hires more and more people on the federal dime, is that we’ll run out of money sooner, and have even more staggering unemployment when government coffers run completely dry.  Again, think Greece.

For an economist, Krugman seems to be awfully ignorant about the difference between wealth creation (private sector) which is meaningful, and printing money (public sector), which creates inflation.  The only way our broke government can afford to hire more workers is to do two things:  (1)  take more money out of the private sector, decreasing wealth creation and private sector job opportunities; and (2) print money, causing inflation. Either act is foolish.  Both, together, will set the seal on our nation’s economic collapse.

The reason that jobs have gone down to zero recently is because employers, surrounded by huge threatened taxes, hyper government regulation, an unstable world economy, and a president manifestly wedded to socialist economics, have hunkered down.  They’re not growing, spending or hiring.  To go back to my Wizard of Oz analogy, like good Kansans, they’ve headed for the storm cellar, and they’re staying there until the socialist Obama economic tornado passes by, and they can look back on the past few years as “only a dream” (or, perhaps, a nightmare).  When they do, they’ll realize that Krugman was playing the Scarecrow’s role, the only difference being that, unlike the fictional Scarecrow, Krugman really does lack a brain.  (And yes, that’s a mean thing for me to say, but Krugman’s giant New York Times pulpit makes his foolishness dangerous.)

What a smart government will do is allow the private sector to thrive.  It will lower taxes and work on America’s energy independence by tapping into America’s vast oil and gas reserves.  There’ll be a short, painful transition period as employment shifts from the bankrupt public sector to a growing private sector, and that will be that.  If the future is really good, the only unemployment we’ll have to worry about is Krugman’s own.

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  • Ari Tai

    To say nothing of all the creative destruction being held-up by these measures.  If they happen over time, it’s painful but bearable.  But we’re just winding up a spring that when it breaks will cause even more damage.  A pity.  First example is Detroit which should now have a “Big One” (Ford) and have recycled by now all those poorly used resources into something more productive, with better management (with the unions and past poor management paying the price for the bad decisions of the past).   Today’s latest example is our Post Office.  All evidence of past poor decisions that will be corrected – irrespective of our unicorn thinking,

  • Mike Devx

    Book writes:

    > For an economist, Krugman seems to be awfully ignorant about the difference between wealth creation (private sector) which is meaningful, and printing money (public sector), which creates inflation.  […]   What a smart government will do is allow the private sector to thrive.

    Ah, Book.  It’s just Krugman being his usual Keynesian Krugman.  We see current events as the repudiation, the disproving, of Keynesian economics themselves.  Krugman will *never* abandon Keynesian economics, unto his deathbed.  So he will stick to it, and continue his massively erroneous pronouncements.  As you said, his bully pulpit at the NY Times is what makes him dangerous.  And the leftist cabal that rewards leftist thinkers with Nobel Prizes, enhancing their “authority”.

    Pardon me for a moment… Leftist Nobel Prize winner Al Gore is on another erroneous, dangerous global warming rant… 😉    I think he’s on his private jet for the fourth straight day, jetting here and jetting there, but demanding that we all be forced to give up meat, and become vegetarians, to save Mother Gaia.

    I see the economist Roubini, well respected in many circles, is advocating increased govt spending as well, claiming that the efforts towards austerity measures to control govt spending are hurting world economies.   Government spending… to reward politically connected cronies in government (and crony capitalists who seek favors as well) …  yes, this has all worked so well in the past.  We should keep doing it!  And five years from now, where will we be?  When, Mr. Roubini, do you start to rein in out of control govt spending?  Never?

  • JKB

    Perhaps as Adam Smith commented on how Marco Polo described China in almost the same terms as travelers of Smith’s time, the United States has “acquired that full complement of riches which the nature of its laws and institutions permits it to acquire.” Of course, he was commenting on the desperate state of the Chinese laborers in the Chinese stagnant economy compared the vibrant opportunities available to the English laborer in the growing economy of England.
    Perhaps we’ve built such an overbearing regulatory state that we’ve achieved peak jobs even as the labor pool grows? So the question is, can we tax those working enough to keep up those who aren’t in the manner to which they’ve become accustom? Also, what does it mean to society to have so many who will never perform productive work in the open market but know only the whims of government charity?

    Acknowledging this, however, would permit us to change the laws and institutions that are constraining growth in America and, thus, escape such a desperate fate. 

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  • Ymarsakar

    I’m still amazed that we had someone with a cognomen starting with Z here who claimed he was a conservative (British I take it) but refused the Leftist label, even though his talk about warming consensus was the exact same line used by Kruggy here.

    So, what is the Left when people deny it yet say the same things about the same things?


  • Ymarsakar

    The Left will never allow you all to benefit from prosperity ever again. That’s not really part of their end game.

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  • Earl

    A. Leftists are leftists FIRST….everything else (economist, feminist, priest, etc.) is secondary.  This is how you understand the flatout contradictions in so many leftist pronouncements, including Krugman’s.
    B. Here’s a fascinating piece my brother sent me, pointing out that what’s going by the name of Keynesianism today is CONTRARY to what Lord Keynes explained and recommended.  It’s just excellent, and I’m confident you’ll find a use for it:

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