It’s a fallacy if opinion among other, equally qualified experts, is mixed. Anyone can cherry-pick an expert to take the place of reasonable debate. Paul Krugman is an excellent economist, but a terrible polemicist. When he sticks to academic economics, such as the work on comparative advantage that got him the Nobel Prize, he’s excellent. But he’s a very partisan left-wing political polemicist, and has a history of writing editorials which contradict not just other economists, but his own published work.
This is true, and that’s the least objectionable part of his plan. The scarier parts are the various plans to borrow lots of money to spend on various industrial projects, bailouts, and infrastructure building.
The problem with infrastructure spending is that the people you’d be ‘putting to work’ are the ones who are already employed. Long gone are the days where you can take men off the bread lines and give them a pickaxe to swing.
Another problem is that infrastructure takes a hell of a long time to ramp up. The initial work would go to engineering and consulting firms, surveyors, lawyers, environmental consultants, and the like. That process would probably take so long that the recession will be over before you even break ground. Then you’ll be trying to hire workers in an economy that is recovering and needs those workers for other things.
There are a few infrastructure projects that are on the books already, have all the necessary prep work done, and could actually start hiring people in a timeframe measured in months instead of years. But there aren’t nearly enough of them to absorb the kind of infrastructure spending Obama is talking about.
But the biggest problem with this plan is that the money won’t go to necessary infrastructure - it will become a huge political slush fund that will be divvied up in Congress in a huge fire sale. When the government coffers are opened that wide, oversight dies. Corruption will increase. Every little piggie in the country will be pushing his way into the trough.
Would you say Congress has a history of allocating infrastructure funds efficiently? Before you answer, you might consider the fact that the levees in New Orleans were in substandard condition for years, through multiple congresses of both parties, while money was being spent on bridges to nowhere and other dubious projects.
Now that’s just stupid. Confiscate the money given to Haliburton? You mean the money paid for contracts they actually carried out? Did it occur to you that if a trillion dollars is spent on ‘infrastructure’, one of the chief recipients will no doubt be Haliburton and other large consulting/engineering firms?
Just about everyone. What do you think a business cycle recession is? It’s a correction. Inventory grows, productivity gains slow, people get laid off. That’s a correction to a supply imbalance. The inventories eventually drop, production increases, and people are re-hired.
Look, it’s no secret that much of the economic growth over the past two decades has been unsustainable. People were injecting money into the economy on the demand side by leveraging increasing home values in a real estate boom. The fed kept interests rates too low, for too long, causing holders of capital to find increasingly speculative and risky places to put their money. The left has been saying this for eight years - saying that the good Bush economy was smoke and mirrors because people were just spending their real-estate capital and keeping the economy afloat.
Well, that’s largely true. Now the real estate bubble has collapsed, exposing the incredibly high debt positions of everyone. There’s no more money to borrow to keep the economy expanding. In fact, people have to take the money they earn and start paying down the debt, so we have to contract the economy to restore some balance. That’s the correction, and it needs to happen.
What happened to the deficit hawks on the left? The ones who claimed that it was Republicans who were the fiscal liberals who ran big deficits? The ones who claimed that Bush’s deficits would eventually bankrupt the country? Now Obama’s talking about running a trillion dollar deficit and engaging in an orgy of spending, and suddenly all those fiscally conservative liberals are completely silent.