Paul Krugman is off his rocker…or meds…or smoking something. He was on a Sunday talk show where he actually said essentially that we need space aliens threatening to attack in order to save our economy. First, the conversation began with the host and a Harvard economist debating infrastructure spending:
KENNETH ROGOFF, PROFESSOR OF ECONOMICS, HARVARD UNIVERSITY: Infrastructure spending, if it were well-spent, that’s great. I’m all for that. I’d borrow for that, assuming we’re not paying Boston Big Dig kind of prices for the infrastructure.FAREED ZAKARIA, HOST: But even if you were, wouldn’t John Maynard Keynes say that if you could employ people to dig a ditch and then fill it up again, that’s fine, they’re being productively employed, they’d pay taxes, so maybe Boston’s Big Dig was just fine after all.
Mr. Zakaria just doesn’t get it, does he? Paying people to do nothing productive doesn’t grow the economy. Without growth the economy will continue to be stagnant. This is typical of the type of government spending that liberals advocate – maybe not directly, but they don’t advocate for the kind of spending that encourages growth. And, many times, it’s not spending that we need from the government to promote growth, it’s the absence of the government from the equation. Less regulation…reasonably done. Less interference. For example, we have a ridiculous patent system in the west that needs largely to be ditched or, at a minimum, seriously overhauled. It has resulted in allowing companies to employ lawsuits as a valid business plan. Case in point (yes, I’m picking on Apple again): Apple is suing across the world to prevent Samsung from selling its Galaxy Tab 10.1. German courts have just ordered Samsung to pull the device from European shelves and they blocked it in Australia. Apple is making similar moves here in the United States against Samsung and the Microsoft Xoom. All because of this patent application. The generic nature of the patent and the fact that courts and clerks evaluate these more so than technologists leads to an anti-innovation marketplace. Do you want a great take on this? Go read Mark Cuban’s take at his blog. Seriously:
If you create a new process, use it. The benefit is from creating the idea and using it in a business to your advantage. Afraid that some big company might steal the idea ? That is life. When you run with the elephants there are the quick and the dead. That is a challenge every small company faces. A process patent is not going to make your business successful.
Back to the main thread: so after we’re all digging trenches and filling them up, we can welcome our space alien overlords…well, maybe hope for them coming so we can recover. At least according to Nobel-prize winning Paul Krugman (seriously, the Nobel process is almost as broken as the patent process):
PAUL KRUGMAN, NEW YORK TIMES: Think about World War II, right? That was actually negative social product spending, and yet it brought us out.I mean, probably because you want to put these things together, if we say, “Look, we could use some inflation.” Ken and I are both saying that, which is, of course, anathema to a lot of people in Washington but is, in fact, what fhe basic logic says.It’s very hard to get inflation in a depressed economy. But if you had a program of government spending plus an expansionary policy by the Fed, you could get that. So, if you think about using all of these things together, you could accomplish, you know, a great deal.If we discovered that, you know, space aliens were planning to attack and we needed a massive buildup to counter the space alien threat and really inflation and budget deficits took secondary place to that, this slump would be over in 18 months. And then if we discovered, oops, we made a mistake, there aren’t any aliens, we’d be better –ROGOFF: And we need Orson Welles, is what you’re saying.KRUGMAN: No, there was a “Twilight Zone” episode like this in which scientists fake an alien threat in order to achieve world peace. Well, this time, we don’t need it, we need it in order to get some fiscal stimulus.