Some might think that the Nobel Prize in economics simply has gone to Paul Krugman's head, but he had a pretty big ego to start with. And its getting bigger. Apparently, Krugman thinks that the only pundits worth listening to are his parrots. In the debate over the stimulus, Krugman is pulling out all the stops to use his position as a New York Times columnist to bully opposition into silence. Today's column is a case in point.
Upset that people have the audacity to speak truth to power and question the validity of the stimulus package, Krugman writes:
But the obvious cheap shots don't pose as much danger to the Obama administration's efforts to get a plan through as arguments and assertions that are equally fraudulent but can seem superficially plausible to those who don't know their way around economic concepts and numbers. So as a public service, let me try to debunk some of the major antistimulus arguments that have already surfaced. Any time you hear someone reciting one of these arguments, write him or her off as a dishonest flack.
Just what are these "fradulent" arguments?
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 â€“ 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.
The point is that nobody really believes that a dollar of tax cuts is always better than a dollar of public spending. Meanwhile, it's clear that when it comes to economic stimulus, public spending provides much more bang for the buck than tax cuts â€“ and therefore costs less per job created (see the previous fraudulent argument) â€“ because a large fraction of any tax cut will simply be saved.
Krugman's claim is simply absurd, and comes pretty close to a pinnacle of self indulgent arrogance. No less than Harvard economist and AEI scholar Greg Mankiw has made the point that research suggests tax cuts might be a better strategy than more government spending (see more on Mankiw here). The Congressional Budget Office has even said that much of the current spending proposal will not be spent in the first 12 months. Yet, Mankiw, CBO analysts, and scores of others with deep economic policy backgrounds should be ignored according to Krugman.