Monday, September 07, 2009

Contra Krugman Again

Tibor R. Machan

A repeated theme of Paul Krugman of The New York Times and Princeton University is that Ronald Reagan was a "market fundamentalist" and too many of the critics of President Obama's economic policies are blinded by this ideology, so much so that they are retarding the great leap of progressivism that would come our way from the President and his team of experts. if only these critics got out of the way! Column after column Krugman criticizes Reaganomics. So let's take a look at this for a moment.

It turns out that Ronald Reagan didn't introduce anything radical or even very different from his predecessors (such as Lyndon B. Johnson and Richard Nixon) that can justly be called market fundamentalism. Nixon had declared that "We are all Keynesians now" and even went so far as to impose wage and price controls, just what an interventionist like Paul Krugman would welcome under certain circumstances and totally anathema to free market economic philosophy. And while Reagan didn't do that, he didn't deregulate much either as it is often contended by his detractors.

In a review of The Age of Reagan, The Conservative Counterrevolution 1980-1989, by Stephan F. Hayward, the reviewer, Ross Douthat, quotes Hayward thus: "Reagan successfully curbed the excesses of liberalism [but] he did not curb liberalism itself." Douthat himself adds, "The angst of his opponents notwithstanding, Reagan's budgets hardly touched the Great Society, let alone the New Deal. The conservative era he ushered in was, in fact, conservative: It halted liberals in their tracks, without significantly rolling back the state that Roosevelt and Johnson had built" (The NY Times Book Review, 9/06/09, p. 9). So all the angst Krugman has been voicing about Obama's critics and their Reagenomics seems to be unwarranted since, well, Reagan was actually quite in line with the policies spawned by Keynes (via Kennedy, Johnson and Nixon).

What this shows is once again that instead of arguing policy, numbers, history, and such, Krugman prefers to engage in name-calling, in labeling and besmirching. As if he didn't trust his readers to be able to follow arguments, as if economics for him were some kind of mysterious science only the in-crowd can grasp. For the rest, what is best is to assault the character of those who disagree with the Professor.

When it comes to facts and figures, however, Krugman is no better. As economist Donald J. Boudreaux of George Mason University writes, "Noting that 'it's important to have some perspective,' Paul Krugman argues that while Uncle Sam's budget deficit is now large, 'we also have a huge economy, which means that things aren't as scary as you might think' ('Till Debt Does Its Part,' [The New York Times,] August 28). Whew! No cause for much concern, for the size of America's GDP swamps the size of the budget deficit.

"During the Bush years, however, Mr. Krugman preached a different gospel. For example, in his February 11, 2005 column--devoted to condemning tax cuts--he insisted that 'the deficit is indeed a major problem.'

"So let's take Mr. Krugman's advice and get some perspective. In 2005, when Mr. Krugman insisted that government's budget deficit was 'indeed a major problem,' that deficit was 2.5 percent of GDP. Today, when Mr. Krugman no longer is very concerned about the budget deficit, that deficit will be about 11 percent of GDP."

Ok, so why bother with Professor Krugman's various infelicities? Because he is a big gun and if such big guns are allowed to carry on with their bad ideas unchecked, there is certainly going to be a high price to pay. Not that refuting them is always going to stem their influence--they often play to wishful thinking and arguments are not very effective means by which to counter their pitch. But one has to try--going down in defeat is far less painful if one has made the effort to set things right.

Today the Left's pitch is effective, in large measure, because George W. Bush has undermined any coherent defense of American values, mainly by his tax and spend policies as well as with his very suspect behavior when it came to the military measures the US took under his watch, indeed, under his command. So when it comes to resisting Leftist policies from President Obama and his academic cheerleaders, it is hopeless to rely on Republicans. What might do the trick is for those of us to keep on watch and exert pressure with criticism who aren't tainted with Bushism.

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