Paul Krugman and His Beloved Deficits
March 11, 2013
A recent article by Paul Krugman on government deficits was brought to my attention (H/T Ad Orientem):
Dwindling Deficit Disorder
Krugman asserts the usual about how government spending really is good for us.
Put it this way: Smart fiscal policy involves having the government spend when the private sector won’t, supporting the economy when it is weak and reducing debt only when it is strong. – Paul Krugman
What a lot of these proponents don’t get, or don’t want to get due to their political beliefs, is expanding government spending often causes a ton of unintended consequences that hurts businesses. Sometimes the funds are used to subsidize pursuits that result in making companies less competitive. This is because they will use the funds to whitewash over their own deficiencies instead of fixing them. Or the spending may be used to direct R&D efforts into dead-end technologies that a politician favors (usually to their own benefit). This can then keep scientists from exploring their own directions that could result in major breakthroughs nobody had considered. Finally, businesses cannot build and sustain real growth based on government spending that can shift or end at any moment. All you’ll end up doing is making another charity case that will require those subsidies from now until eternity.
In terms of individual liberty, spending often expands the military/industrial/surveillance state in virtually every corner. Local police today have battlefield weapons being given to them. The Department of Homeland Security is buying billions of rounds of ammo and armored personnel carriers. Airports now put people through humiliating searches to travel freely (and want to bring the same searches to bus and train stations). Then there is the massive expansion of the entitlement state that is creating millions more dependent on government and will expect that entitlement to be there forever. It encourages and expands a growing underclass. On and on it goes.
But spending makes jobs, right? Sure I guess. But are those jobs good for you? If the government announces they are spending $1 Billion on making 10,000 new jobs what are those jobs going to be?
It won’t be daisy pickers.
It will be new federal regulators, new DEA agents, new TSA agents, new military contractors, new Unmanned Aerial Vehicles, expansion of federal agencies, domestic surveillance expansion, etc.
So regardless of the good intentions, the outcome will be against the interests of citizens over the long term. I personally don’t care that 10,000 new jobs are available to people that want to fondle my crotch at the airport. Nor do I care that 10,000 new people are now working to expand domestic surveillance capability. Do you?
But the academic bean counters get so wrapped up in their ideas that they never seem to think about these and many other issues. However, these outcomes are almost always what happens when you give a large government a blank check to spend on whatever it fancies. The end result is not going to be good for anyone (or the economy) in the long run.