Comments (36)

• Enjoy Every Sandwich

  Do you have enough dirt to fill in holes that big?

  This reminds me of my childhood, when my Dad tried to explain government spending to me. He referred to it as "taking money out of the right pocket and sticking it in the left pocket". At the time I didn't really understand but now I can see the process in action.

  Except he should have added that both pockets have holes in them...

  Published: January 15, 2009 8:49 AM

• Lucas M. Engelhardt

  I love the premise. Krugman is writing crap so that the rest of us have jobs. Suddenly, it all makes sense... in that his motivation is clearer now.

  Published: January 15, 2009 9:10 AM

• Rob

  Thanks for the article. I'd like to send a link to your article to some friends of mine, but you didn't fill Krugman's hole well enough. Without taking on the "multipliers" directly, Krugman and the other leftists sound more scientific and practical to a layman, whereas your arguments sound more theoretical. The fact that you admitted ignorance of the multipliers makes it seem as though Krugman is looking at his part of the elephant and you are looking at your part of the elephant, and from a layman's perspective you could both have some good points. To demolish his argument you need to write with authority on the multipliers.

  Therefore, Krugman created not just 1 hour of employment for you, but perhaps 15. :)

  Published: January 15, 2009 9:10 AM

• Tim Kern

  "...it says that you have to raise real GDP by 2 percent from what it would otherwise have been to reduce the unemployment rate 1 percentage point from what it would otherwise have been."

  Even Keynes realized that the relationship is far from linear, especially near the tails (assuming there is any value to the theory at all).

  When I taught economics, I pointed out that a politician could point to "increased GDP" by simply paying more for the same goods and services. Government's paying $100 for an $80 item doesn't increase productivity; on the contrary, it reduces the taxpayers' ability to save or invest. This diminishes, to some degree, both present ("sensible") spending and future real output -- present and future productivity (allowing that inflation masks some of these effects).

  My sixteen-year-olds got it, but I guess a Nobel Prize or a seat on Capitol Hill removes the necessary brain cells, substituting arrogance for analysis.

  Published: January 15, 2009 9:20 AM

• I Hate Taxes

  Where do you take your "dirt" to fill those holes ?

  By taking "dirt" over there to fill holes here, won't you create holes overthere ?

  So the stimulus plan is just displacing the problem, it is not filling it up.

  Published: January 15, 2009 10:05 AM

• Horst Muhlmann

  Funny stimulus cartoon

  http://furiousdiaper.com/?p=910

  Published: January 15, 2009 10:11 AM

• Inquisitor

  Please, PLEASE no more Krugman articles. Focus on Galbraith instead.

  Published: January 15, 2009 10:39 AM

• Stephen Grossman

  How many jobs would be created if the goverment subsidized research to invent a time machine to send Krugman back to the Soviet Union? Or back to Karl Marx?

  Published: January 15, 2009 11:56 AM

• Robert A. Meyer

  Another logical article from Robert Murphy.

  Apparently establishment economists reside in a world of illusion—a world of illusion populated not by actual human beings, but by some type of fictitious entity called the collective.

  If economists such as Krugman would think in terms of the individual, they might actually grasp the workings of the marketplace. In fact, they would give up their ridiculous notions about how people should act contrary to their best interests.

  A person who actually believes that consumers should cure their debt problem by spending more money has obviously removed himself from reality. You know, give an alcoholic with more liquor, supply a drug addict with more dope, solve your debt problems with more debt. Ah, there is no hope for the illogical thinker.

  Krugman is a famous economist, a Nobel Prize Winner in Economics. His success rests on the sad fact that Americans love it when doctors (quacks) of economics inject them with their daily dose of illusion. The medicine of reality that a Robert Murphy offers isn’t to their liking. And of course, Krugman is a virtuoso at playing the establishment’s favorite tune “Government Interventionism.”
  

  Published: January 15, 2009 12:36 PM

• Niccolo

  I'm still wondering exactly how a recession occurs despite the most massive years of fiscal spending in US history.

  
  I've asked Krugman and he still has yet to answer.

  Published: January 15, 2009 12:59 PM

• Stanley Pinchak

  Inquisitor is right. I believe that he sees the need to focus less on the intellectuals of the lesser sense and focus more on the "philosophers" who are the ideal for the intellectual rank and file. As Hayek recognizes, the philosopher has great ability to effect the general consensus in a direction in favor of the views on what amounts to greater coercive intervention, typically a call for enlarged and emboldened state action. Attacking Krugman or other intellectual directly may have little effect on the superstructure of the anti-capitalist mindset. Keeping in mind Thoreau, Freedom advocates are spending much time attacking the shoots and would greatly increase their effectiveness by undermining the foundational philosophers of socialism.

  Published: January 15, 2009 1:11 PM

• Mike D.

  Austrian Keynesianism?
  
  Paul Krugman digs a hole. Robert Murphy and Bill Anderson come along and fill it in!

  Published: January 15, 2009 1:12 PM

• Brent

  "Freedom advocates are spending much time attacking the shoots and would greatly increase their effectiveness by undermining the foundational philosophers of socialism."

  That has already been done and has had negligible results. The problem is with the analogy. People look to the Krugmans of the world for analysis and advice... so in this sense, Krugman is the "foundation". Failing to respond to the Krugmans would be largely giving up the fight for freedom.

  Published: January 15, 2009 1:18 PM

• Larry N. Martin

  Paul Krugman digs a hole. Robert Murphy and Bill Anderson come along and fill it in!
  
  If only we could get Krugman to stay in the hole while it's being filled in. Then something productive will have been accomplished!
  

  Published: January 15, 2009 1:20 PM

• Rob

  Great question, Niccolo. I plan to use it too.

  Published: January 15, 2009 1:31 PM

• Nasikabatrachus

  "If only we could get Krugman to stay in the hole while it's being filled in. Then something productive will have been accomplished!"

  I like your thinking! This way, when the re-filling is done there will be a volume of dirt left over equivalent to Krugman's volume. In order to put that dirt in a hole we'll have to dig a hole of equivalent volume, and after that is done the displaced dirt from that hole will go in another hole, ad infinitum, and voila the economy is fixed.

  I am a stone-cold economic genius. Someone please hook me up with an economics degree so I can start my NYT column.

  Published: January 15, 2009 1:51 PM

• Mike D.

  Larry N. Martin wrote:
  
  
  If only we could get Krugman to stay in the hole while it's being filled in. Then something productive will have been accomplished!
  
  No such luck - you're forgetting that Paul Krugman is a weasel - he'd just burrow his way out!

  Published: January 15, 2009 2:16 PM

• John Z.

  Besides the Krugman articles, has anyone asked Krugman on what he spent his Nobel Prize money on?
  No doubt he put his newly found money where his mouth is and has privately "stimulated" the economy more than most folks could. An itemized listing of such spending would help give us less economically literate individuals some ideas as to where we could spend our money so that we can do our own part to get this economy moving.

  Published: January 15, 2009 2:44 PM

• Henry Miller

  Seems like many of you have never dug a hole and filled it in again. I've done this many times, you almost always need more dirt to fill the hole back up, even though you put something in that hole that takes up a lot of the space! (for example a fence post)

  Published: January 15, 2009 2:59 PM

• Eric

  Maybe Krugman can apply the equation of exchange to how quickly the dirt moves from one hole to the next.

  This would be dd/dt I guess, the differential velocity of dirt.
  

  Published: January 15, 2009 3:26 PM

• Fephisto

  "#

  I'm still wondering exactly how a recession occurs despite the most massive years of fiscal spending in US history.

  
  I've asked Krugman and he still has yet to answer."

  Gj Niccolo, I'm going to use this one.

  Published: January 15, 2009 4:25 PM

• Yancey Ward

  I am shocked at the callousness being displayed here towards Dr. Krugman. It isn't funny in the least to advocate burying someone alive.

  Make sure he is dead first.

  Published: January 15, 2009 5:01 PM

• Mike D.

  Yancey
  
  Oh no! The last thing we need is more "New Ideas from Dead Economists"!

  Published: January 15, 2009 5:08 PM

• Eric

  Fephisto,

  Aw, that's too easy for Krugman, isn't it obvious. He'd say they didn't spend enough.

  Quoting David Bardallis,

  "A schlopparazillion here, a dreedilyhillion there, and pretty soon we're talking about real money," and "Senate has already adopted legislation increasing the national debt ceiling to $4,000 pigglywiggly jibbityjabbity frippityfroppity badaboomillion."

  (BTW, I was ROFL when I played that using the firefox text to speech plugin)

  Published: January 15, 2009 5:51 PM

• newson

  it's not just the making and re-filling of holes that creates wealth, it's the careful placement of dollar-bills in the glass jars that get buried that gives keynesianism its intellectual horsepower.

  murphy, stop nattering and grab the shovel. america needs you digging.
  

  Published: January 15, 2009 5:55 PM

• Nima

  I also wrote an article taking down Krugman's nonsense here:

  http://www.economicsjunkie.com/welcome-to-krugmanland/

  Published: January 15, 2009 6:01 PM

• Deefburger

  I think John Z is on to something. What would Mises do with a "Joe the Plumber" income in this economy? What Practical advice could we get?

  It seems to me, talking to my clients and friends, Left and Right, that all people need to turn up their noses at Krugman and his ilk is to benefit directly from a more common sense economic thought. Left or Right, a loaf of bread is still a loaf of bread, retirement is stilll not possible, and gas still goes into the tank of the car that cost an arm to purchase.

  What should we be doing as individuals that is of practical benefit to us?

  Krugman et al can "brainwash" all day long and it means nothing to the average Joe. If his type of "thinking" is to be reduced to the compost it is, then a practical guide for the layman is needed, and an on-going discussion of it, as it applies in real time, to real situations, within the limited free market we DO have. A successful track record of predictions and advise will do more to change people's minds than philosophical discussion and counter argument ever will.

  So, what DID Krugman do with the money? Did he say one thing and then do something else? I'll bet he invested it, socked it away somewhere, probably bought monetary metals and other hard commodities.

  What is a good way to save in this economy and culture?

  What would Mises do with HIS money?

  I'm an ammature philosopher. I can tell you most people can't get close enough to philosophy to really grasp the importance of philosophical thought. Krugmanesque Econ might as well be the Mikado sung in swahili! But put their incomes on the table and threaten to "use it or loose it" and they get pretty philosophical real quick!

  Freedom is only a practical issue when you are in jail. Talk to people about the problems they have today, and you can reach them when you talk about the bigger picture. Make practical predictions that people can learn to count on, and Krugman will become the quack he is, in the people's eyes.

  Let's make Austrian Economics PERSONAL.

  Published: January 15, 2009 6:43 PM

• Adam Odorizzi

  Ha ha, you can't, mere Austrians pretend to refute the Krugman, capitalist himself per, well, nobody, when he has already done the same to you here:

  http://world.std.com/~mhuben/austrian.html

  Seriously I'm very hard to annoy in these interwebs but it was difficult not to hate that this level of dumb can be achieved in one concentrated source of dna most of which I share.

  You guys probably aren't familiar with this site but it's hilariously bad. Chuckle away...

  Published: January 15, 2009 7:20 PM

• Inquisitor

  Spot the obvious troll, again!

  Hilariously bad is a term I'd reserve for Krugman's pathetic "critiques" of Austrian econ. So indeed, do chuckle away. You don't seem to realize that Krugman is being dismantled here (and elsewhere.) Huben is just a hack who likes collecting links of articles already refuted and dissected, such as those of Krugman. He needs to get a life.

  Published: January 15, 2009 7:49 PM

• Inquisitor

  PS: Nevermind, premature reaction, so apologies for that. Yeah, Huben's site does border on being pathetic as I said above. A collection of refuted nonsense.

  @Stanley: Well Galbraith is not a philosopher, but he is becoming popular in his role as anti-capitalist agent provocateur.

  Published: January 15, 2009 7:51 PM

• Jason

  The current 'leaders' and the economists they recieve advisment from are going to drive this country into the ground and we may soon lose the number 1 spot in the world. China just bumped Germany out of the way for the number 3 spot.

  Published: January 16, 2009 8:39 AM

• Kevin

  I listened to Krugman recently on a radio interview. He was as unintelligent on radio as in print. A question this poses is what was the Nobel Committee thinking? Were they feeling sorry for him or felt he needed the money? Very curious.

  It also strikes me that not only is he providing work for others but I have to believe that he is trying very hard to get a job with the Obama administration. Of course it would have been with any other administration had someone else won. He is an opportunist. He sees the opportunity to keep his name out there so he is bucking for a position to stay in the lime light espousing the popular nonsense. Otherwise, people will get tired of listening to his drivel and will move on to something that hopefully makes sense.

  This may be the opportunity of a lifetime. With the great question asked about why did the recession happen even though we "stimulated" like never before, it should not take a genius to ask if this isn't working, how does this get solved? Continued strong and tireless efforts of Austrian School followers in writing, speaking and blogging as much as possible is required to give those people what they will be asking for and need to know. It will also present alternatives that may induce actual thought.

  Published: January 16, 2009 11:54 AM

• Inquisitor

  It's funny, even a student without much education in economics wrote in my uni newspaper how foolish the spend-and-spend policies by Brown in the UK are, him being an intellectual epigone of Keynesians such as Krugman... obviously economists can't model commonsense, so out of the picture it must go! Can't be "operationalized" after all!

  Published: January 16, 2009 12:17 PM

• Deefburger

  I've been thinking. Yes, I know, a dangerous activity if ever there was one.

  What about a simulated economy that people can play in? I mena online, like WoW or Second Life? I've noticed that there have been some parallels drawn between the "economies" as set up within these worlds as functional models. How about a simulated "Free Market" with a "Gold and Silver" standard, independent user created banking, trade, production, etc?

  Theory could be put to the test with alternate models using socialism, central banking, inflation etc. And a control world could be created that mimics the actions and institutions that do exist. Such a simulated world could give insights into the way the theories operate in practice.

  Might be fun and informative.

  Published: January 17, 2009 2:42 PM

• Michael Orlowski

  Well he came back, and tried at least. :p

  Published: January 17, 2009 10:24 PM

• Ned Netterville

  Imitation being the highest form of flattery, I've been a perfect pink since reading Paul Krugman's op-ed entitled "Wall Street Voodoo" in today's (1/19/09) NY Times. Imagine, a Nobel laureate borrowing phraseology from my humble blog (http://www.jesus-on-taxes.com/uploads/Barack_Almighty.pdf). It is less than a week since I sent Mr. Krugman a link to my article, in which I refer to Keynesian economics as voodoo (p.3), and lo and behold here he is referring to tax cuts as voodoo economics. I do declare, and think most English scholars will agree, mine is the more felicitous usage.

  Published: January 19, 2009 9:54 PM