Patrick Ishmael wrote about this in the Green Room, but why should he have all the fun? Not too long ago, Dick Durbin lamented the demise of credibility for Keynesian economic proposals, but even I didn’t realize the Keynesians had become quite this desperate. Fareed Zakaria offers a strange view of economics where government seizes capital to dig ditches, refill them, and then roll around in the taxes paid by the workers who did the work while everyone winds up with nothing. Paul Krugman then doubles down on this idiocy by explaining that economic growth would be just around the corner — if only Space Invaders came to life:
I love the war analogies. Doesn’t the Left keep blaming our current economic malaise on the two wars that George Bush started? If war was all it took to create economic growth, we’d be peaking now, wouldn’t we? And didn’t Barack Obama start a new war with Libya this year? How is the economic growth from that conflict working out?
The rest of this is just sheer idiocy. Krugman, who won a Nobel Prize in economics, somehow forgets to tell Zakaria that seizing capital from productive enterprises in taxes (or worse, borrowing against future legitimate production in deficit spending) to fund the “ditch cycle” has opportunity costs — namely, the opportunity to produce something other than pre-filled ditches, which have a real value of zero. That’s actually a significant part of what’s wrong now. Government spending doesn’t create economic growth; it takes money from actual production, and so should be used sparingly and only for necessities.
Krugman then takes Zakaria’s reductio ad absurdum and makes it more absurd by postulating that a mistaken alarm of a space invasion would create vast economic growth, which would just remain even after the Emily Litella moment when the space aliens didn’t invade. Unfortunately, the Nobel Prize-winning economist doesn’t explain what would happen when all of the assets built to meet the threat turn out to be useless and can’t be converted into productive assets for a non-space-war economy. Thanks to the massive seizure of capital it would take to create the defensive and offensive assets to meet that threat, we’d be left with little to power our economy, especially in a highly regulatory (and rationed) total-war economy.
It does explain a lot about Obamanomics, however, which has seized capital to deliver almost no real new value — only to slightly speed up projects already on the planning board, and slightly speed up car and home sales that would have taken place anyway. The credibility of Keynesian economics died with Porkulus, and all Krugman and Zakaria do is keep redigging the grave and filling it back up — which is apparently good for their own personal economies.