Paul Krugman made the mistake of over-sharing this past weekend when he told CNN’s Fareed Zakaria he thinks that the United States economy would benefit from a military build-up to fight made-up space aliens. He’s been defended as being fed up with Republican obstructionism, being desperate to make a point, or even being wholly and completely correct. He’s entirely wrong though, and his thinking (what there is of it) is an example of the kind of depersonalized economics that has cost this country so much.

You’ve probably seen the video by now. If not, your sides will ache through the rest of this post:

Economics is more than just the manipulation of balance sheets, which is how the hyperinflation trillions-in-stimulus crowd see it. Professor Krugman does not accept that essentially, economic activity is the production of something valuable, and he does not believe that human labor has intrinsic worth, besides its taxability. Therefore what people do does not matter; in fact, if lying to them makes the economy function more smoothly, that’s fine.

This is a vision in which Man has no dignity—in which Man is not made in the image of God or anything else. The study of human interaction, then, is nothing more than moving numbers around on a page, and people are no different than plastic cars to be shifted across a traffic jam board game. (It’s telling that Krugman turns to space aliens to save our economy.) Contrast this view with what the Pope said this morning at World Youth Day.

What does have value? The state, which for progressives like Krugman is the engine of historical progress. Enter Keynsian economics, and this weekend’s gibberish.

  •  This sounds a little like Orwell’s 1984. The three super-nations fight wars for the sake of A) keeping their people’s occupied, and B) creating a continuous and stable labor system, essentially creating things and blowing them up so more need to be made. The resemblance is scary.

  • While I agree that Krugman is an intellectual lightweight and does plenty of “over-sharing,” I think your economics has some gaps in this post. Economic activity is so much more than the production of something “valuable.” That sentence where you say that actually sounds a little Marxist to me.

    I take issue with conservatives making Keynesian Economics taboo. To Economists, Keynes represents
    post-Marxist, capitalist economics. Keynesian economics is not large government and large government spending or intervention. Its essence is counter-cyclical fiscal policy. This just means deficits during severe
    recessions and, very importantly, surpluses during sustained economic
    expansion. Now absolutely, liberals hijack and cherry pick from Keynesian fiscal theory to justify spending increases. This doesn’t make Keynesian economics borderline Marxist, as it seems some would have us believe. Even MILTON FRIEDMAN (a Reagan advisor) said in 1965 “we are all Keynesians now!” Keynes was suspicious of the power of
    unions, warned against the perils of inflation, praised the virtue of
    profits, and called Marxists “illogical and dull.” Not exactly liberal positions…

    • The first point to make is that we don’t run surpluses during economic expansions. That means that no matter how nice it sounds to have government as a shock-absorber, it’s can’t be one. I think Keynes was naïve insofar as he didn’t realize this was going to be a problem; he lived in a progressive world. Viz., to defend Keynes by saying that Krugman, Obama & co. misuse him in borrowing and spending each and every year is really to criticize Keynes. The gov’t-as-shock-absorber idea is a nonstarter.

      Second, the deeper point here is that Krugman denies all human nature. When I say that Krugman “does not believe that human labor has intrinsic worth,” I am saying that Krugman doesn’t believe there’s an economic difference between a dog digging a ditch and a man digging a ditch. There is plainly a difference there. Perhaps implicit in this posting is my belief that economics must be founded on a correct (& that means Christian) understanding of human nature. The study of human action without an understanding of humanity is a losing proposition. Clearly, Marx failed on that score, and so does Krugman. I submit that Keynes, to the extent that he misjudged what the public policy establishment would do with his theories, failed also.

      This is all to say that I don’t respect people who toss out ideas that take on lives of their own. What has happened to Keynes and Hegel hasn’t happened to Plato and Burke.

    • Roger McKinney

      Nice response, Ken! Tim, have you read the last chapter of Keynes’ GT? I found it very shocking. In it he offers the goal of his economic policies and it has nothing to do with capitalism.

  • Kenneth, it isn’t letting post as a reply for some reason.

    Before the surplus in the late 90s (a surplus during an economic expansion) the feeling was similar to today–that the budget deficits are indefinite. No one predicted a surplus and it came out of nowhere.
    Does this mean that anyone who believes that a balanced budget is the best fiscal policy is naïve? The budget is certainly never balanced–why couldn’t they realize that this would be a problem?
    People misuse the words of Jesus Christ Himself! Televangelists use His words to get people to send money and liberals use them to justify entitlements, just as a couple examples.

    • If no one predicted a surplus and it came out of nowhere, then we shouldn’t be attempting the kind of grand manipulations Keynes suggested. Lets not treat as organic chemistry something that more resembles meteorology.

      As for the Jesus counterexample: liberals who use Christ’s words to justify burdensome entitlements are turning him into a political figure (see here which is a different kind of misuse than what I was talking about. The televangelist, if he is misusing Christ’s to defraud people, does not get the kind of mainstream attention that Keynesian economics does (unless he’s indicted and sent to trial).

    • Roger McKinney

      If you’re up for some Keynesian revision, check out this:

      “Keynes gushes over the Soviets will to engage in bold “experiments” in
      social engineering. In Russia, “the method of trial-and-error is
      unreservedly employed. No one has ever been more experimentalist than
      Lenin.” As for the catastrophically failed “experiments” of the first
      years of Bolshevik rule, which had compelled the shift from the “war
      communism” to the then-current system of the New Economic Policy(NEP),
      Keynes describes them in the most anodyne terms: earlier “errors” had
      now been corrected and “confusions” dissipated.

      “In his passion to malign money-making, Keynes even resorted to calling on psychoanalysis for support…In his Treatise on Money, 
      Keynes refers to a passage in a 1908 paper by Freud, in which he writes
      of the “connections which exist between the complexes of interest in
      money and defaecation” and the unconscious “identification of gold with
      faeces.” (Freud 1924:49-50; Keynes 1971b: 258 and n. 1; Skidelsky 1992:
      188, 234, 237, 414).