I quit reading Paul Krugman long ago, so I hadn’t realized that he was now advocating a war on space. Does he have an exit strategy?
I’ll let Maguire properly lampoon it, but I would note something that people rarely do about a payroll-tax cut:
My impression of the general economic consensus is that hiring people to dig and re-fill holes, or monitor for space aliens, does not provide any more stimulus than any other cash transfer to a person likely to spend it. Handing out money on street corners, the Bernanke helicopter drop, and payroll tax cuts should all be in play.
If a proposed stimulative shovel-ready project adds social value (e.g., a usefual bridge, or a useful bridge repair), then borrow the money for it; if the project adds nothing, it won’t be more stimulative than a cash transfer. Krugman’s belief in the power of make-work and his preference for that over tax cuts, is motivated by somethig other than standard economic textbook theory.
The payroll-tax reduction that we managed to get out of the Democrats was on the employee side (as is fitting with their insistence on demand-side, rather than supply-side economics). It is extra money in the employees’ pockets, which they presumably spend. But it does nothing to ensure that they have jobs. A cut on the employer side, on the other hand, would make it cheaper to hire people. This sort of encapsulates the economic divide between the two parties.
But it does nothing to ensure that they have jobs. A cut on the employer side, on the other hand, would make it cheaper to hire people.
Money is fungible. If the employee payroll tax is lowered, the employer can cut salary offers and still offer the same take-home pay. The incentive for job creation is the same regardless of which side of the tax you cut.
While it is true that the employee bears all the cost of his employment (regardless of the payroll sleight-of-hand), wages and salaries are adjusted annually or by change of station. In the long-term, it’s a wash, but in the short term, it’s a tax cut to whoever is paying it.
I don’t understand the point of these things. If they want to give me money, then do so. I could use a billion here and there. My needs are modest, but I can expand them to fill the funding provided. Instead, they go through all these bizarre rituals. We can’t just give people money even though that’s exactly what we want to do, we need to go through some pointless makework.
All I need is the flight plan for Bernanke’s helicopter.
We’re already paying millions of people welfare and unemployment benefits and get nothing in return for it. What we should do is make work a condition for receiving the benefits. Instead of getting stuff for free, they’d have to actually show up and work for it and it wouldn’t cost any more than what we’re paying now. Every community has a list of things that need to be done but no money to pay for it. By making people on welfare and unemployment do this work, we taxpayers are actually getting something back for our money. If we make the work unpleasant enough, perhaps some of them will become motivated to get a real private sector job.
Don’t say that while London is burning and NY isn’t.
The British government is paying out billions of pounds in social welfare and their cities have had terrible riots. Think things are so different here? Paying off people won’t prevent them from rioting should the provocation or opportunity be sufficient (e.g. LA Rodney King riots).
It’s now necessary but insufficient, that much is obvious, yes. But I dare you to tighten the spigot now. Wait, let me check my stack of ammo and canned goods, first…
I know a few people who do negative work–even if they worked for free it would cost money for someone else to come along and fix up their mess. People who can’t be fired aren’t going to be under any incentive to do a decent job.
I’m a longtime Twilight Zone fan, and I can’t recall the specific episode he refers to. I’m not saying he’s lying; I just don’t remember it off the top of my head.
But knowing Twilight Zone as I do, I’d say that there’s an excellent chance that the plan backfired spectacularly.
All we are saayyyiiiinnnggg… is give war a chance… ya, it’s a catchy tune.
rickl, I wouldn’t worry about whether Krugman correctly remembered an episode, incorrectly remembered an episode possibly from a different show, completely misremembered this episode, or is outright lying to pick up talking head points. Just consider the absurdity of the statement. He thinks it’d be a good idea to fake an alien invasion in order to get some “fiscal stimulus”.
He’s not advocating spending public money on productive purposes. He’s not even advocating giving money away like the Bernenke moneycopters. He’s advocating a vast misallocation of resources, which is like taking value from society. So I could be running around in Alaska with a the modern equivalent of the sharp stick while “bug hunting,” or I could be doing productive things like helping to run businesses. Guess which one employs more people and creates more wealth.
We’re not even to the point of counting the negative value of taking stuff from productive people and giving it to the less productive. It’s the creation of a very costly illusion. To consider how expensive, guess what happens when people find out that the aliens don’t actually exist? Instant recession as all the resources that were in space defense projects and such have to be shuffled to where they’re actually doing useful stuff again.
Concerning the US, there was a big recession in 1945 when the war ended and everyone had to go back to whatever they were doing in peacetime. At least there, they knew the war was real but winding down. They could plan for a transition back to a peacetime economy. With the alien invasion it’s “Sorry guys, but for the past five years, you’ve been wasting your time on imaginary bug hunts.” There’s not going to be a gentle letdown.
Finally, the destructiveness of a fake alien invasion is an abomination to economics. Krugman isn’t an economist any more.
Has Paul Krugman, Nobel-prize-winning economist, never heard of Frederic Bastiat? He’s advocating a broken window writ large.
Give a man a fish, and he’ll riot unless you keep giving him fish.
Fair point, but IMHO monitoring for space intrusions is a bit like paying for insurance. With luck, the money spent doing it will be wasted; but if the money spent means spotting a Dinosaur Killer with our name on it then every penny spent on Spaceguard (and on the entire space programme to date, for that matter) will be a bargain.
In addition, space monitoring means jobs for scientists and engineers – of whom the entire West has far too few. And what if SETI does turn up trumps?
Daver Says:
August 15th, 2011 at 2:56 pm
I know a few people who do negative work–even if they worked for free it would cost money for someone else to come along and fix up their mess. People who can’t be fired aren’t going to be under any incentive to do a decent job.
Kids and some husbands also play this trick. I tried it on my father when I was growing up. He kept making me redo the job until I did it right. I quickly learned that it was better for me to do the job right the first time. If you’re paying someone and they do this, stop paying them.
Krugman’s memory is only half defective. The episode in question was “The Architects of Fear” from 1963, but it was an Outer Limits, not a Twilight Zone. I remember the episode for several really over-the-top and unnecessary bits of scientific nitwittery in the plot. It starred the late Robert Culp as the angsty object of the biological makeover. Seems he’d agreed to the transformation and then fallen in love with a woman who really didn’t bank on a long-term relationship with a hideous chlorine breather(!)… I know. Don’t get me started on the consummate weirditude of that bit of shark jumpery.
The self-appointed cabal of scientist/philosopher kings who cooked up this particular idiocy were motivated to prevent what they saw as inevitable nuclear war between the East and West by ginning up a synthetic Threat From Beyond. The late 50’s and early 60’s were a sort of golden age of cheeseball nuclear war hysteria, which the real-life Cuban Missile Crisis just kicked into an even higher gear. Call it a gold-anodized age of nuclear angst.
I was just reaching operational sentience about that time. Living less than 60 miles from a major SAC base you’d think I’d have had more reason than most to join the run-in-circles-yell-and-shout brigades, but the whole THE END IS NEAR thing simply struck me as seriously overwrought. Looking back, I see it as my first appreciation that one should always take the wild-eyed doom-mongering of leftist worry warts with a grain of salt suitable for stocking a cattle lick.
Larry J,
Since 1996, there has been a work requirement for receiving welfare benefits and a five year lifetime cap. I’m not sure how well this is enforced on the ground, but it’s on the books.
Unemployment compensation is another matter entirely. The cost of this is, in theory at least, covered by one of those numerous obscure payroll deductions in the mysterious welter of little boxes on our paycheck stubs. In long-term hard times as at present, I’m sure these funds are quickly exhausted, but, unlike welfare, unemployment benefits are not a pure transfer payment. Neither, for that matter, are state disability payments. Those come out of another of those obscure deductions and can last up to a year. After that, the disabled qualify for Supplemental Security Income which is part of Social Security and also is covered – or at least was until recently – by payroll deductions.
As for getting the welfare population to do useful work of a public service nature, the public employee unions are unalterably opposed to that idea for obvious reasons. One more reason, perhaps – even if well down my personal list – to whack the public employee unions with all deliberate speed. Concerns about supervision costs and quality of work results, though, are not without foundation.
Since 1996, there has been a work requirement for receiving welfare benefits and a five year lifetime cap. I’m not sure how well this is enforced on the ground, but it’s on the books.
Just because something in on the books, it doesn’t mean it’s enforced. That 5 year limit should’ve kicked millions of people off of welfare by 2001. Did it happen? Do pigs fly?
If Krugman is now citing the Twilight Zone (or Outer Limits?) then perhaps it’s time to draw parallels between the much-touted benevolence of the Left and “To Serve Man”.
That 5 year limit should’ve kicked millions of people off of welfare by 2001. Did it happen? Do pigs fly?
There! Up in the sky! It’s a bird! It’s a plane! It’s a blue-ribbon Poland-China!
Yeah, the welfare rolls actually did drop dramatically in a lot of places. Over 50% in some states. That was before the Obama Depression kicked in of course. Since 2008, welfare rolls are back up.
Larry J Says:
August 15th, 2011 at 12:40 pm
“If we make the work unpleasant enough, perhaps some of them will become motivated to get a real private sector job.”
I think you overestimate some people’s motivation level. There’s also some nontrivial motivational factor in working somewhere you can’t be fired.
“Every community has a list of things that need to be done but no money to pay for it.”
What you would do then is freeze out opportunities for entrepreneurs to find affordable ways of addressing needs.
It’s a coookkkbbbooookkkk… Stolen from W.C.Fields of course, who loved children… with a little hollandaise sauce.
Google tells me I’m repeating myself… eh, it’s over a year…