Paul Krugman, a month or two ago, suggested that sometimes you need “a Hitler or a Hirohito” to end depressions. To some, this was interpreted as Krugman advocating the occasional need for war. Krugman’s defenders, most notably Brad Delong, came to his defense, mocking the inconsiderable, unsophisticated minds who could construe such a thing. Krugman clarified his remarks in this post Economics Is not a Morality Play.
The point is that it would have been much better if the Depression had been ended with massive spending on useful things, on roads and railroads and schools and parks. But the political consensus for spending on a sufficient scale never materialized; we needed Hitler and Hirohito instead.
Translation: We only need war if the political consensus fails to match my policy preferences.
The totally batshit insane Neanderthals obviously stand corrected.
Krugman continues to lend his considerable, nuanced expertise on other compelling issues, such as the debt. In this post, Default Is In Our Stars, Krugman argues that the effective outcome of the current private debt is “significant default.” The “clean” way is through inflation. The “ugly” way is through bankruptcy. However, to those of simple minds, after wading through the fallacy of composition regarding the paradox of thrift, another paradox may be afoot here. This is the paradox of “People aren’t as Fucking Stupid as Paul Krugman thinks they are.” This paradox manifests itself by the astonishing fact that a monetary policy dedicated toward effective default of private debt via inflation leads to a lack of lending/investment into a deadbeat economy; instead resources are diverted into inflation hedges. In economic jargon, we call this the “Paradox of Stagflation.”
Of course, the “Paradox of Stagflation” is only held by the “totally batshit insane.” Krugman, one of the chief progenitors of American partisan politics being a struggle between the forces of scientific reality vs mindless ideology, easily foils the apparent empirical reality of the “paradox of stagflation” by typically throwing up some 1930’s economic charts and blaming current empirical reality on the lack of political consensus around his interpretation of said charts. Oh, the insanity…
On the issue of public debt, Krugman used ABC’s “This Week” to argue that the problem can only be solved by “Death Panels” and VAT taxes. This is a provocative statement in that he seems to be validating the Palin critique. Krugman used this blog post, Death Panels and Sales Taxes, to clarify what he meant. Of course, by “Death Panels,” he only meant Medicare rationing end-of-life medical care. Whew, without that clarification, one may have gotten the impression he was actually referring to Palin’s “Death Panels,” which were Efficiency Boards rationing end-of-life medical care for dear ole Grandma. It’s nuance like this that makes you appreciate the distinction between “scientific reality vs mindless ideology.”
Let us sum up Mr. Social Democrat, Paul Krugman’s political prescriptions: Inflation, Death, and Taxes. Now that’s a winner. Of course, if we fail to see it Krugman’s way, if we fail to form a political consensus around Krugman’s preferences, well, then, there is always “a Hitler or a Hirohito.”