Voodoo, Eh?

If you knew someone was a Nobel laureate and he told you that the sky was green instead of blue, would you believe it?

You might. Especially if that laureate had gotten his prize for work in a scientific field that dealt with the atmosphere. Even if your own eyes contradicted his assertion, you might just figure, well, surely they wouldn’t have given him that prestigious prize if he wasn’t a lot smarter than I am about these things.

Well, I’m sorry, but I would rather risk exposing my own ignorance than be one of those in the crowd going on about how great the emperor’s new clothes look.

I’m thinking here of the things Paul Krugman writes on his blog for The New York Times (access limited by pay wall). By all accounts Krugman is an accomplished economist who has done good academic work in his field. I have not personally read the books that earned him his Nobel, but I understand they are solid. In fact, Krugman’s detractors have great fun citing passages from his books that directly contradict assertions he makes in his blog, which is titled The Conscience of a Liberal. I suppose the blog’s title should be a clue that these writings are less about economics than about political ideology.

Let’s take his three of his most recent posts. On Wednesday he berated Federal Reserve Chairman Ben Bernanke for not following his suggestion of printing lots more money, suggesting that (in a Star Trek reference) Bernanke has been “assimilated” by the Borg-like Fed. Later that day, Krugman posted a chart comparing, month by month, the number of public employees under Clinton, Bush and Obama. It shows the number dropping drastically under Obama while it grew under Clinton and Bush. It’s a tad deceptive because it combines federal, state and local employees, thereby masking the huge growth in federal employees under the current president. Krugman makes it sound as though the elimination of so many state and local employees was simply a caprice of policymakers and not a direct result of public money running out due to a very bad economy. What Krugman is basically arguing is that the federal government should go into even more debt or else print even more money so that local governments can do more hiring.

Yesterday, in a post titled “The New Voodoo,” he railed against an editorial in The Financial Times which supported government economic policy in Britain, a country that is currently in a double-dip recession. This was accompanied by another one of Krugman’s charts, this time showing a correlation between austerity and shrinking GDP. Krugman suggests that the former is causing the latter. This is like drawing a chart showing a correlation between the availability of food and rates of starvation. Sure, you could argue that there isn’t much food around because people aren’t eating, but what kind of mind jumps to that interpretation? Krugman wants us to believe that the economy is shrinking because the government has decided to spend less, rather than the obvious conclusion, which is that the government is necessarily spending less because there is less money available for spending because the economy is shrinking.

Krugman is just one of many voices I keep hearing that repeatedly recite, “Austerity doesn’t work.” Yes, austerity is bad for an economy, which is why you want to avoid having to resort to it in the first place. But once you get to that point, then your only alternatives to austerity are 1) to keep borrowing money as long as someone is willing to lend it to you, which will not be an infinite amount of time, and 2) to keep printing money and debase your currency until your economy collapses completely. The problem isn’t that austerity doesn’t work. It’s that an economy that’s not working will necessarily lead to austerity.

I do not have any kind of degree or credential in economics, let alone a prestigious prize like Paul Krugman. So who am I to question this expert’s wisdom? That’s a fair question.

On the other hand, I’m not the one arguing that the government is going broke because it is not spending enough money.