15
Aug
2011
Krugman and Space Aliens
Lots of people sending me this. Eh, I mean he’s really just trying to come up with a fanciful illustration of his (crazy) position. Technically he’s not calling for an alien invasion, he’s (at worst) calling for a hoax of an alien invasion.
One too many Asimov novels?
Krugman said: “If we discovered that space aliens were planning to attack and we needed a massive buildup to counter the space alien threat and really inflation and budget deficits took secondary place to that, this slump would be over in 18 months.”
So he’s never heard of the broken window fallacy?
Krugman’s not an idiot, he’s just a genius and is way ahead of his time. 6 wars isn’t enough, we need an alien invasion!
If we can’t come by inflation honestly, let’s come by it dishonestly?
This is strangely reminiscent of the final act of the antagonist in “The Watchmen”.
Traditionally Krugman’s alien citations have to do with currency devaluations.
I think that the fake aliens narrative is a worse indictment of Keynesianism than a real aliens narrative. There’s nothing left to say about these people.
Krugman said it and he means it. It is our job to convince average people that this is what “elite” opinion really says and that this is truly the basis of government “economic” policy.
Really, this seems like the same justification as Keynes’ pyramid-building and bottle-burying. It doesn’t matter what we dedicate our capital to — just that we should consume capital in order to “create jobs”.
I find it especially galling where he says we’d be better off having consumed all that capital building useless alien defenses.
Is he in complete denial of the possibility of, and resulting harms due to, malinvestment?
Not consume capital – supply bonds.
And like Krugman says – obviously we want to do productive things cause there’s lots of productive things to do, but it’s not the productivity of any given project that is the central point of macroeconomic stabilization.
re: “I find it especially galling where he says we’d be better off having consumed all that capital building useless alien defenses.”
No, you’ve gotta keep your stocks and flows right. What he said was that it would fix the recession. Look at what he said about WWII too – major social loss, major GDP fix. You can have your stocks and your flows going in opposite directions.
Besides – if we follow him on his alien invasion thought experiment, I don’t think alien defenses would be all that useless!!! (Nor – for that matter – was saving Europe from the Nazis completely useless).
DK, please tell me you don’t actually believe this stuff. Please tell me you say this stuff so you can be employed in the “mainstream”.
I can understand how people can become socialist during their early naive years. I cannot comprehend how anyone can be a Keynesian.
Today is the 40th anniversary of Tricky Dick’s gold announcement. 8-15-71 was a Sunday and I had been waterskiing all day. My friends and I were sitting by the edge of the lake listening to WRIF when Tommy Chong announced “Hey man, da president of the United States, man”. I thought they were going to play a comedy sketch. But then the real Nixon came on with “My fellow Americans etc….” That was real funny. By then, I had had my low draft number for almost two years and I really loved Nixon, for sure.
And we’re all Keynesians now:
http://www.flickr.com/photos/bob_roddis/3520131008/in/set-72157600951970959
DK,
Hm, we must have a disconnect somewhere. I am pretty sure Krugman’s scenario included the actual building of useless alien defenses. Presumably it is this building of defenses that creates the economic activity he is looking for — jobs, etc.
Are you saying that we would not actually build alien defenses, or that the building of these defenses would not consume capital? Or is this argument just entirely too sophisticated for my simple-minded questions?
Not consume capital – supply bonds.
For government, they are the same thing.
Supplying bonds is to acquire funds from the market’s savings pool, which is then SPENT (expenditures made not for the purpose of making subsequent sales), not invested in productive projects (expenditures made for the purpose of making subsequent sales).
To the extent that any government spending generates a physical object (Hoover Dam, etc), it is a consumption expenditure, because it uses up real resources and the entity that made the expenditure has no means to replace the used up resources. Once the money is spent, once the resources are utilized, that’s it. The government has to acquire a fresh new set of funds if it wants to spend more on other projects, thus consuming capital once again.
Contrast this with expenditures made by business ventures, and we can see that expenditures made for the purpose of making subsequent sales, that consumes capital (i.e. runs at a loss) are punished and avoided. Market forces act upon the consumer of capital by reducing the amount of capital in their possession. With government, there are no such market forces. The losses are incurred by the taxpayers, and those making the expenditures can keep on making expenditures and thus feed off the productive sector, who has to supply them with real resources.
>And like Krugman says – obviously we want to do productive things cause there’s lots of productive things to do, but it’s not the productivity of any given project that is the central point of macroeconomic stabilization.
The idea of “we want to do productive things.” The only way anyone can know whether or not some project was “productive” was if it was made via the market process. Productivity is, ultimately, based on the individual and their choices. Only if there are mutual gains to be made by all participating parties through individual choice, can a project be “productive.” However, when the government takes people’s money, you cannot claim that the people who pay are making any gains. Taxation is not a voluntary exchange. It is a coerced confiscation. Thus the we can only say that taxation leads to some people benefiting at the expense of others. There is no general improvement. The ONLY people who are “productive” are those who engage in free trade of legitimately acquired private property. Everyone else are unproductive parasites.
Next, the idea that “it’s not the productivity of any given project that is the central point of macroeconomic stabilization.” It is a fallacy to believe that violence can ever make individual lives better off. All it can do is benefit some at the expense of others. What you call “macroeconomic stabilization” is really just the government trying to use more violence to correct the problems it caused by past violence, thus generating more economic destabilization. And I don’t know if you can see it, but you just argued that “macroeconomic stabilization” is actually parasitical. That the point is not productivity is to assert that the point is anti-productive. You are just reiterating Rick’s point.
What he said was that it would fix the recession. Look at what he said about WWII too – major social loss, major GDP fix. You can have your stocks and your flows going in opposite directions.
GDP is not a measure of economic health. It just measures spending. To “fix” GDP is just to fix spending. If the government printed and spent $10 trillion to hire 10 million people to build a giant pyramid made of dog excrement, then the “G” variable in GDP would rise by $10 trillion, and GDP would rise by something less than $10 trillion, but it will almost certainly rise from where it otherwise would have been, or what it was prior to the spending. Economically however, massive amounts of resources will have been diverted away from productive enterprises, i.e. voluntary trade generated enterprises, and towards the government’s spending.
Notice how the Keynesian position is Platonic, in that they wan to improve an abstract universal concept before they seek to improve the lives of individuals that generate such abstracts in the first place.
>Besides – if we follow him on his alien invasion thought experiment, I don’t think alien defenses would be all that useless!!! (Nor – for that matter – was saving Europe from the Nazis completely useless).
Then finance a defense against aliens yourself, and leave us sane people to worry about medicine, books, food, housing, cars, clothes, and other valued goods instead of your delusional worries on alien invasions. Don’t call for everyone to be forced into your delusions as if they don’t deserve any challenging.
You are so hoodwinked by Krugman that you will not even criticize this absurd alien invasion nonsense to justify massive government spending and military build ups.
A share Roddis’ position. How can anyone be a Keynesian? It’s full of straightjacket craziness.
Even if there were aliens who says they would be out to kill us? I think we have enough weapons already.
The problem is the debt load and it’s not getting any better.
I’m sure in Krugman’s hypothetical the slump would be over in a statistical sense, but so what? No-one cares about a recession because they are interested in GDP figures in and of themselves. People want to get out of recessions because they represent a broadly felt lowering of living standards. GDP figures and the like are of value only to the extent that they give insight to the level of living standards. The same is true of the employment rate. If somebody could lose their job and enjoy the exact same income no-one would take a second to look at employment figures.
What would happen to living standards in Krugman’s hypothetical economy? They would almost certainly go down and go down quite dramatically. A military build up to fend off an alien invasion wouldn’t just bring in to play idle resources, it would divert huge swathes of our economic activity away from producing goods and services that people want and into the kind of things that political establishment think we need. People generally would have less and its not even certain that those who found work thanks to the injected military spending would be in a better economic situation than they were previously.
There is absolutely no point in providing a ‘fix’ for the the slump in nominal terms if it would worsen those very things which make us want a fix for the slump in the first place. If Krugman were a genie and you were an average schmo that made a wish to marry Salma Hayek he’d fulfill it by giving her a plethora of emotional problems that made her so fat and miserable she settles for a nobody like you leaving you stuck with a bloated, nagging hag for the rest of your life.
Up above aliens hover
Making home movies for the folks back home
Of all these weird creatures who lock up their spirits
Drill holes in themselves and live for their secrets
@MamMoth
Did you see Krugman’s refutation of MMT today?
http://krugman.blogs.nytimes.com/2011/08/15/mmt-again/
Though I don’t agree with MMT, he seems to have missed a few crucial parts of the theory. Just wondering what your thoughts on it were.
I didn’t read today’s column yet, but from the reactions I’ve seen I think you are right and that he is still missing crucial basic points of MMT, namely the role of bonds with a floating fiat currency and the role of reserves wrt bank lending. He is closer to Scott Sumner in that respect. Go figure
Where do Keynesians think wealth and growth come from? How do governments create it? All an alien invasion would do is force everyone to consume far less; and that is hoping that the government manages the war economy properly. The economy as a whole might improve but what about getting the things we want? Why take away our ability to do that and pull ourselves out of the holes government intervention has brought us?
There’s a great book which deals with this sort of thing called “The Forever War” by Joe Haldeman.
A war with aliens is accidentally started by some jumpy astronauts exploring deep space. Governments then keep the war going as a form of Keynesian stimulus. The author seems to believe in Keynesian economics, but it’s nasty enough anyway.
Just think of the numbers!