Notice the premise:

In fact, the true cost of government programs, especially public investment, is much lower now than in more prosperous times. When the economy is booming, public investment competes with the private sector for scarce resources — for skilled construction workers, for capital. But right now many of the workers employed on infrastructure projects would otherwise be unemployed, and the money borrowed to pay for these projects would otherwise sit idle.

But how do we know it would otherwise sit idle next week?  We don’t.  It is precisely the deflationary correction that means that the labor will not sit idle.  Investors will see in the labor, and in other under-utilized resources, an opportunity for investment.

But that won’t happen, at least not as soon or as widely, if the government uses debt or taxes to keep these resources scarce.  But Krugman acts like there is no relationship in time.  We simply now live in a world where there is less private spending.  Someday we’ll suddenly be in the world of more private spending.  But in the meantime, we are able to know everything there is to know about the economy by what we see now.  And if we see a lack in private investment than we can simply fill in the gap without giving a thought to what we are doing to the possibility of ever seeing private investment recover.

Of course, a lot more could be said about the problems with Krugman.  For example:

It’s true that the economy is currently shrinking. But that’s the result of a slump in private spending. It makes no sense to add to the problem by cutting public spending, too.

But public spending comes from private incomes.  The government has to borrow or take money from the private sector.  Unless it simply utilizes the counterfeiting option.  Acting like “public spending” comes from some other different source is simply wrong.

A government-caused recession is about to be turned into a serious government-caused depression at taxpayer expense.

I found this story fascinating:

A memorabilia collector has been jailed for five years for possessing a Second World War rifle listed as a prohibited firearm. The rifle was not in a condition to fire live ammunition.

But Stafford Crown Court heard replacing the deteriorated pin would have made that possible. Phillip Peter Kent, aged 29, of Owen Walk, Highfields, Stafford, was arrested in the street by police acting on information at 7.30am on June 20 this year.

Officers asked what they would find if they searched his home and he immediately told them about the Lee-Enfield rifle.

Mr Stephen Bailey, defending, told the court yesterday Kent had not bought ammunition nor sought to make any alterations to allow live bullets to be fired.

He also said Kent, a former member of the Territorial Army, was told by the seller the weapon had been de-commissioned.

Mr Bailey said: “He is a collector of memorabilia . To his knowledge the rifle was not capable of firing. He paid £100 for it from a man in Hanley about a year ago. He never knew about firearms legislation.

“He was told by the person who sold it to him it was de-commissioned. He was a bona fide, not secretive, collector and was immediately and absolutely co-operative.

“The gun was in the state in which he received it and, although that does not make it a non-prohibited weapon, there was no ammunition, no evidence of his seeking any or of intentional or actual use.”

Kent pleaded guilty to possessing the rifle. Pleading with Judge John Maxwell to spare him the minimum five-year jail term for this category of offence on the grounds of exceptional circumstances, Mr Bailey said: “Custody would be devastating. It would deeply affect his family and he would lose his accommodation.”

But Judge Maxwell said Parliamentary guidance meant strong sentences should be given for illegal firearms possession. “I feel bound to impose the minimum sentence of five years,” he added.

So here we have a man who harmed no one, and no one doubts never intended to harm anyone, kidnapped for five years.  Everyone knows that he was not a criminal, yet the judge “feels bound”

Albert Jay Nock wrote about this sort of thing:

Once, I remember, I ran across the case of a boy who had been sentenced to prison, a poor, scared little brat, who had intended something no worse than mischief, and it turned out to be a crime. The judge said he disliked to sentence the lad; it seemed the wrong thing to do; but the law left him no option. I was struck by this. The judge, then, was doing something as an official that he would not dream of doing as a man; and he could do it without any sense of responsibility, or discomfort, simply because he was acting as an official and not as a man. On this principle of action, it seemed to me that one could commit almost any kind of crime without getting into trouble with one’s conscience.

Clearly, a great crime had been committed against this boy; yet nobody who had had a hand in it — the judge, the jury, the prosecutor, the complaining witness, the policemen and jailers — felt any responsibility about it, because they were not acting as men, but as officials. Clearly, too, the public did not regard them as criminals, but rather as upright and conscientious men.

The idea came to me then, vaguely but unmistakably, that if the primary intention of government was not to abolish crime but merely to monopolize crime, no better device could be found for doing it than the inculcation of precisely this frame of mind in the officials and in the public; for the effect of this was to exempt both from any allegiance to those sanctions of humanity or decency which anyone of either class, acting as an individual, would have felt himself bound to respect — nay, would have wished to respect.

First of all, lets point something out: Obama has amazing popularity still and he has credibility in offering us a change from politics as usual.

Debt and spend is politics as usual.

I have no dounbt that President-elect Obama means well. But he doesn’t understand economics.  No one in power does.  Keynsianism was developed to justify the use of power at the expense of the public good, providing a rationalization for saying it was good for the public.  As long as its lies are believed, politicians will continue to consume us and their own children.  So that’s what we’re stuck with. We’d probably get a substantially identical position from McCain.  The only thing that makes Obama worse is that he may have the power to change the status quo if he could see the need to do so.

It is sad to see a lost opportunity.

What needs to happen right now is obvious to everyone.  Americans need more jobs that pay a sufficient wage.  The only way that can happen however, is if industries are started or renewed that provide real goods and services.  What the Obama Administration is going to do is prevent people from investing and innovating to find and invent this new economy.  He is going to siphon the potential labor market away from this development into his wishlist of things to do.  A lot of those things are really good ideas.  (I have to admit, even though I want better and cheaper broadband, I found that technocratic riff particularly painful to watch.  It was such a “I’m cool and I’ll support the cool people” moment.  Yuck.)  But even if these are good ideas in themselves, they are not necessarily rationale priorities at this point in time.  Yes, energy efficiency is good.  But if you are spending money you don’t have and siphoning off the labor pool from entrepreneurs, then inefficient electric lights are actually more efficient.  Politicians need to understand that sometimes the car you own, despite its problems, is preferable to the car you want to buy on debt you can’t afford to pay back.

So, as I see it, this economic hardship is going to be lengthened and maybe even worsened by Obama’s economic team.  I repeat, McCain would probably do much the same thing.  So this is not a partisan critique.  But Obama has persuasive powers lacking by just about anyone since Reagan.  In a sense, McCain would be preferable because more people would be apt to be skeptical about his grandiose promises to take immediate action.  I just wish Obama would use his leadership to suggest a really helpful policy for our economic hardship, one that allows the market to fix the economic mess the government has given us.

Our critics are not pleased, but I hope we’ll be forgiven this small observation: The spendthrifts who mangled America with the nightmare of double-digit inflation, record interest rates, unfair tax increases, too much regulation, credit controls, farm embargoes, gas lines, no-growth at home, weakness abroad, and phony excuses about “malaise,” are the last people who should be giving sermonettes about fairness and compassion. March 2, 1984

For all its troubles, the United States is still prosperous, still free; yet America’s leaders speak of uncertainty, self-doubt, guilt, and that word “malaise.’‘ September 16, 1987

Too many of our leaders told us that America‘s troubles were the fault of “we, the American people,” as if somehow we’d let our leaders down, and not the other way around. They told us that we’d caught a disease called “malaise.” And then they turned around and told us that even if we reformed there wasn’t much we could do because great historic forces were at work, the problems were all too complicated for solution, fate and history were against us, and America was slipping into an inevitable decline. December 13, 1988

American prestige seemed like a memory. Our standing in the world had fallen. Our government was talking about a malaise. You remember that talk, and you were the ones that were supposed to be having the malaise. Well, 4 years later America is a very different place. And the Democrats are saying that it’s my fault. They keep insisting that I take responsibility for it. Well, they’ve talked me into it. July 26, 1984

We want growth and opportunity. The other side wants us to lower our expectations. Well, we have a vision of making America great again. The other side speaks of national malaise, a sickness. We offer hope. October 4, 1982

Four years ago, we had to cope with, as Jerry told you, the double-digit inflation nightmare and the interest rates of 21 percent and the highest peacetime tax burden in our history, zero growth, rising crime rate, scholastic aptitude test scores that had been falling for two decades, a foreign policy as feeble as it was fearful, and to top it off, the people in Washington whose only answer was, “All of you suffer from a malaise.” Well, the American people didn’t suffer from any malaise; they suffered from leaders who denied them opportunity, and opportunity is what we’re putting back in the hands of you, the people. September 20, 1984

Four years ago tonight I asked you to join us in a great national effort to free America from leadership that said we suffered from a malaise, that told us we must learn to live with less, and that our children could no longer dream as we once had dreamed. And, yes, that inflation, taxes, no growth at home, and the steady loss of freedom and respect for America abroad were all beyond our control. November 5, 1984

And the headline today:

NEWSMAKER-Volcker brings experience with economic malaise

But aside from the way that word makes me crazy, the news article tells us exactly what we need and why so far the lame duck Bush administration, Congress, and the idiot-money-pundits, have only set us up for a much worse scenario.

Volcker commands respect from Democrats and Republicans alike for his decisiveness in ending a devastating inflationary spiral in the late 1970s. He did so by hiking interest rates to unprecedented levels, launching a recession in 1981-82 that was the worst since the Great Depression of the 1930s.

We could have left this behind us in 2002, but Bush wanted to defer the inevitable.  We have made the situation much worse. But we need to stop now.

No He Can’t

by Anne Wortham
by Anne Wortham

         
DIGG THIS

Fellow Americans,

Please know: I am black; I grew up in the segregated South. I did not vote for Barack Obama; I wrote in Ron Paul’s name as my choice for president. Most importantly, I am not race conscious. I do not require a black president to know that I am a person of worth, and that life is worth living. I do not require a black president to love the ideal of America.

I cannot join you in your celebration. I feel no elation. There is no smile on my face. I am not jumping with joy. There are no tears of triumph in my eyes. For such emotions and behavior to come from me, I would have to deny all that I know about the requirements of human flourishing and survival – all that I know about the history of the United States of America, all that I know about American race relations, and all that I know about Barack Obama as a politician. I would have to deny the nature of the “change” that Obama asserts has come to America. Most importantly, I would have to abnegate my certain understanding that you have chosen to sprint down the road to serfdom that we have been on for over a century. I would have to pretend that individual liberty has no value for the success of a human life. I would have to evade your rejection of the slender reed of capitalism on which your success and mine depend. I would have to think it somehow rational that 94 percent of the 12 million blacks in this country voted for a man because he looks like them (that blacks are permitted to play the race card), and that they were joined by self-declared “progressive” whites who voted for him because he doesn’t look like them. I would have to be wipe my mind clean of all that I know about the kind of people who have advised and taught Barack Obama and will fill posts in his administration – political intellectuals like my former colleagues at the Harvard University’s Kennedy School of Government.

Read the rest