Paul Krugman is deeply frustrating. In today's New York Times op-ed, Krugman makes two important points about intellectual dishonesty - or perhaps mere intellectual hackery - among Republicans, but then engages in dishonesty/hackery of his own. First, Krugman's good points.
Better math, please...
First, there’s the bogus talking point that the Obama plan will cost $275,000 per job created. Why is it bogus? Because it involves taking the cost of a plan that will extend over several years, creating millions of jobs each year, and dividing it by the jobs created in just one of those years.
Krugman is correct about the apples/oranges comparison between the one-time cost and multi-year salaries, but I think that misses a much bigger problem with this "cost per job" analysis. The $800+ billion is a total cost, not just salaries. You're not just paying people...you're paying people to build things. That requires concrete, steel, computers, machinery, and products whose costs cannot simply be compared to salaries. (which is not to endorse the spending; just to put it in context)
Sadly, people on the Right - people whose work I have liked - are making this point. Worse, I've seen people on the Right argue that this is good "messaging", so we should ignore the fact that it's factually misleading. I'm not sure why policy makers or citizens would - or should - trust us if we can't make simple distinctions like those outlined above.
A liquidity trap changes normal policy options...
Finally, ignore anyone who tries to make something of the fact that the new administration’s chief economic adviser has in the past favored monetary policy over fiscal policy as a response to recessions. It’s true that the normal response to recessions is interest-rate cuts from the Fed, not government spending. And that might be the best option right now, if it were available. But it isn’t, because we’re in a situation not seen since the 1930s: the interest rates the Fed controls are already effectively at zero.
Krugman is correct about the normal options and those available now; it's a point he's made before (which I noted here, while reviewing Krugman's previous comments about fiscal stimulus. At the time, there was still substantial room for monetary policy to have an impact. That is no longer the case).
Paul Krugman's own intellectual dishonesty...
Next, write off anyone who asserts that it’s always better to cut taxes than to increase government spending because taxpayers, not bureaucrats, are the best judges of how to spend their money.
Here’s how to think about this argument: it implies that we should shut down the air traffic control system. After all, that system is paid for with fees on air tickets — and surely it would be better to let the flying public keep its money rather than hand it over to government bureaucrats. If that would mean lots of midair collisions, hey, stuff happens.
But, other than anarcho-capitalists, who says there is no worthwhile government spending? The stimulus debate is not even remotely about whether we should fund the air traffic control system, or anything else as vitally important - there is already a budget process in place for those projects - but about whether we should fund/speed up funding for thousands of wish-list projects and programs around the country. It should give you an idea of how thoughtful Krugman's objections are that he has to rely on a false dilemma (if some government spending is valuable, then complaints about completely different government spending must be spurious) to support his argument.
It is difficult to win a fight over the role and expansion of government in the midst of a crisis. It is doubly difficult if we let Democrats frame the debate around the most important spending items possible, rather than the vast majority of more questionable spending. The value of spending is determined on the margins - whether the next dollar is worth spending - and that is where we ought to be fighing it. Republicans can do two things to help themselves here:
- Continue to highlight the ridiculous spending in the stimulus bill
- Insist that the politicians (including the Mayors, et al, who are demanding these projects) provide cost/benefit metrics and means to measure the results for each project. Did it create the number of jobs promised within its budget? Did it meet the cost/benefit calculation for any other value promised?
(1) will ensure that the public is aware of the least valuable money being spent, while (2) can ensure that the public learns just how valuable/wasteful this spending turns out to have been. If our argument is that the government spending will be wasteful, then it is vitally important to our future than we be able to measure and document the results.