Is Paul Krugman Heartless, Clueless or Confused (Pick Only One)?

posted at 8:41 am on July 5, 2010 by Legal Insurrection

Paul Krugman reserved July 4 for what must be a deliberate deception, Punishing the Jobless, on the issue of extending unemployment benefits, which recently failed to pass the Senate.

Krugman blames Republicans, whom he terms “heartless”:

By the heartless, I mean Republicans who have made the cynical calculation that blocking anything President Obama tries to do — including, or perhaps especially, anything that might alleviate the nation’s economic pain — improves their chances in the midterm elections.

The only problem is that Krugman ignores that Republicans were in favor of extending benefits by taking the money from elsewhere in the budget, including unused stimulus funds. It was the Democrats who balked at this solution, insisting on running up more debt. So the entire premise of Krugman calling Republicans heartless amounts to nothing more than a fiscal policy dispute. Why aren’t Democrats heartless for not going along with the Republican proposal?

Next, Krugman terms “clueless” people like Sharron Angle who have mentioned that the welfare state, including unemployment benefits, can create a disincentive for people to take jobs they otherwise would not take. Krugman admits that this is a real phenomenon:

Do unemployment benefits reduce the incentive to seek work? Yes: workers receiving unemployment benefits aren’t quite as desperate as workers without benefits, and are likely to be slightly more choosy about accepting new jobs. The operative word here is “slightly”: recent economic research suggests that the effect of unemployment benefits on worker behavior is much weaker than was previously believed. Still, it’s a real effect when the economy is doing well.

Krugman says this phenomenon is irrelevant in a bad economy, but once again he ignores that Republicans were willing to extend benefits if the benefits were paid for in the budget, not paid for with more money borrowed from China. So who is the clueless one?

Last, Krugman views unemployment benefits as immediately stimulative in the economy, because the money will be spent. That’s a fair point, which is why it makes sense to use stimulus funds for this purpose, rather than propping up bloated state governments and union contracts. So Krugman’s point actually defeats his point.

Back to the title question. Is Paul Krugman heartless, clueless or confused?

Yes.

Cross-posted with updates at Legal Insurrection Blog

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