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Krugman and the Inevitable "I Told You So" - Tim Duy "Bad Things Happen When You Fight the Fed"; Final End of Bretton Woods 2?

By Mike Shedlock on 10/11/2010 – 10:42 pm PDTLeave a Comment

As predicted on numerous occasions, Paul Krugman is once again pleading for still more Keynesian stimulus. Please consider Hey, Small Spender

Here’s the narrative you hear everywhere: President Obama has presided over a huge expansion of government, but unemployment has remained high. And this proves that government spending can’t create jobs.

Here’s what you need to know: The whole story is a myth. There never was a big expansion of government spending. In fact, that has been the key problem with economic policy in the Obama years: we never had the kind of fiscal expansion that might have created the millions of jobs we need.

And a side consequence of this awkward positioning is that officials can’t easily offer the obvious rebuttal to claims that big spending failed to fix the economy — namely, that thanks to the inadequate scale of the Recovery Act, big spending never happened in the first place.

But if they won’t say it, I will: if job-creating government spending has failed to bring down unemployment in the Obama era, it’s not because it doesn’t work; it’s because it wasn’t tried.

Never Enough

No matter how much money Government spends it will never be enough because government cannot create lasting jobs. As soon as the stimulus spending stops so do the jobs. No matter how many times Austrians insist Krugman look down the road to what happens to his Fantasyland model when the stimulus stops he refuses to discuss this simple point.

It is impossible to debate Keynesian clowns because no matter how much money they blow building bridges to nowhere like Japan did, the answer will always be “It wasn’t enough”.

I Told You So

The easiest prediction in the world to make was that Krugan would whine “I Told You So”.
I discussed the prediction in Are we “Trending Towards Deflation” or in It?

Actually, we have seen a never ending parade of “I Told You So’s” from Krugman but this one tops them all.

Indeed, he has taken his whining to a new level by claiming “If job-creating government spending has failed to bring down unemployment in the Obama era, it’s not because it doesn’t work; it’s because it wasn’t tried.

No Paul, it’s because it doesn’t work, no matter how hard you try.

Cheering the Loss of Government Jobs

Krugman whines about the loss of government jobs.

Consider, in particular, one fact that might surprise you: The total number of government workers in America has been falling, not rising, under Mr. Obama. A small increase in federal employment was swamped by sharp declines at the state and local level — most notably, by layoffs of schoolteachers. Total government payrolls have fallen by more than 350,000 since January 2009. “

I openly cheer the loss of government jobs, and did so recently in Economic Nonsense from Ezra Klein at the Washington Post

The only genuinely good news in Friday’s jobs report was the much needed shedding of 159,000 government workers of which only 77,000 were temporary census workers.

Shed another million government workers and you have a small start as to what needs to happen. Some don’t see it that way, including Erza Klein at the Washington Post

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Tags: Bretton, building bridges, , fiscal expansion, , Woods

Related Articles:

  1. Bernanke says Lawmakers Should Consider Rules on Fiscal Limits; Expect Hissy Fit from Krugman; Bernanke Pisses in the Wind
  2. Paul Krugman on Stimulus
  3. How Policy Errors Cause Depressions (and how "in isolation" some things Krugman says make sense)
  4. Krugman Suffers Foot-In-Mouth Disease; Lessons on Price Stability
  5. Krugman vs. Greenspan on "That ’30s Feeling"; Calculated Risk Sides with Krugman, I Side with Greenspan

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