“Nobody Understands Debt,” says Paul Krugman, the socialist-Keynesian wacko who passes for an “economist” in certain circles that are too short of brain power to raise unreasonably the bar for who should be called an “economist.” (We call these circles liberal-progressive.) Krugman, of course, writes for the New York Times, an organization that certainly understands debt very well, being chronically on the verge of bankruptcy in the last 15 years or so. So Krugman now wants to school everyone else about debt, especially those of us pesky right-wingers that still entertain old-fashioned medieval values like honesty and fairness in business, self-restraint in spending and consumption, and entrepreneurship when it comes to growth.
So he tells us we don’t understand government debt. It is not the same as the debt of a family. A family must be honest and pay back its debts; but the government doesn’t have to. That’s what Krugman says. A government can wait long enough to make debt “irrelevant,” and then just forget about it. He gives the example of WWII and the savings bonds that financed the war. At the end, the individual people were left with the useless bonds, and the government went its way happy and cheerful as if nothing had happened. And you know what, Krugman says, everything was fine and dandy. Governments don’t have to repay. Al Capone didn’t, either, for the same reason.
Besides, he says, the debt is what we owe to ourselves, after all. So what’s the problem? Tell that to those people that believed the government during the war and didn’t get a penny on their savings bonds, or what they got was rapidly destroyed by inflation. The investors, you know, don’t see it as “owing to themselves” because eventually they raise the cost for the debt. And at the end, the government is in the situation of Germany in 1930 or of Greece today: No one wants to lend to it anymore.
Ah, he says, the only caveat is, the debt shouldn’t grow beyond the tax-base, because governments need to increase taxes to repay the debt. Strange. He said that governments don’t have to repay it. Then why have taxes at all? If the government can borrow indefinitely and doesn’t have to repay, why not just keep borrowing without repaying, and see where this leads to. No? Why not? Or is government debt only an excuse for higher taxes and more government control? You bet.
Krugman admits that taxes create a little problem: Some resources are diverted into the unproductive activity of tax avoiding and evasion. Notice, he doesn’t say that people will not be motivated to work and innovate if too much of their money is taken away; they will work just as enthusiastically, you know, even if you tax them 100%. Why not tax them 100% then? This way no one will try to avoid taxes because everything a person has will be illegal anyway – no point to evade payments.
Ah, but he has a case to make, the same case Keynes made and never proved: That government debt and spending is necessary to create jobs. But why do we need government spending to create jobs? Why not just get these people to work and not pay them? Just transform the promise to pay them into government debt. And government debt doesn’t have to be repaid. And these people shouldn’t complain: they owe it to themselves, after all. So give them jobs – that’s what we want, right?
The Left is truly running out of brain power if Krugman is what they call an “economist.” The man just can’t see the logical contradictions between two consecutive statements in the same piece he writes. And he praises Obama and even advises the administration. No wonder we are in such mess.