Now I have heard everything. Last Sunday on CNN, Paul Krugman and Ken Rogoff were discussing the present economic situation. As expected Dr. Krugman suggested that we could spend, spend and spend our way out of recession. I swear that I saw Dr. Rogoff’s head explode when Krugman not only suggested that war was a great way to fight recession, but that even an invasion by space aliens would probably be a good thing.
Ok, I simplify here. I can’t believe that even someone as myopic as Paul Krugman would like to see the Earth colonized by invading lizard people from the planet X, but this further demonstrates how completely wacko a good part of the economic establishment has become.
Krugman’s space alien comment came after Fareed Zakaria asked a question that contained a standard misunderstanding of Keynesian economics. He asked if it would benefit the economy if the government hired people to dig a ditch and then fill it up again. That was when the Mad Doctor Krugman went on a rant about how the Second World War was a wonderful stimulus device and how preparing for an alien invasion would be a great way to end an economic slump – even if there were massive government deficits and inflation.
Now I’m not so sure about the alien invasion part – I guess it depends on whether the Federation or the Klingons are the ones landing, but it is a very strange to suggest that somehow a massively destructive war that killed millions of people – including over 400,000 Americans – is even considered as being a good thing.
It is unquestionably true that it was necessary for the United States to spend the nation’s treasure, its savings, and its future on defeating Hitler and Tojo. This is not only true morally, but economically. I can’t imagine how horrible the world would be had the Fascists won. But that does not mean that war in general is in any way a productive enterprise. Not only does war divert resources from productive activities, but by definition it encourages that those items that are eventually produced are – well blown up. To suggest that war is good for the economy is no different than suggesting that jack-hammering away the interstate highway system would benefit America, or that well maybe we should hire thousands of unemployed Linens-n-Things clerks to tear down the Empire State Building. The whole concept is both preposterous and downright dangerous.
Unfortunately, people – including people in the Administration – buy into the sort of claptrap that Dr. Krugman and his ilk try to peddle to the American people. Neither wars, alien invasions or transfers of money from people who work to those who do not will improve the economic situation in the United States.
The simple fact is that economies thrive when people invest and build things – not when they spend and destroy things. Even Dr. Krugman should know better than that.