Tag: Paul Krugman

Vikings and Pirates and Taxes, Oh My!

Today’s episode of “Hagar the Horrible” could be an epigraph for the new Fall 2009 issue of Cato Journal.

Hagar_The_HorribleThis issue includes Greek economists Michael Mitsopoulos and Theodore Pelagidis on “Vikings in Greece: Kleptocratic Interest Groups in a Closed, Rent-Seeking Economy” as well as Peter Leeson, author of The Invisible Hook: The Hidden Economics of Pirates, writing (with David Skarbek) on the effects of foreign aid. As for taxes, well, editor Jim Dorn has assembled a number of useful papers:

  • Andrew T. Young on taxing, spending, and “fiscal illusion”
  • Michael J. New on the “starve the beast” hypothesis
  • Alan Reynolds on Paul Krugman’s misunderstanding of the monetary and fiscal lessons of the Great Depression and Japan’s lost decade

And on the general rapaciousness of the state, don’t miss Jason Kuznicki’s careful review of government racial discrimination from the end of Reconstruction until the civil rights movement.

Paul Krugman vs. The Daily Show

In a recent New York Times column (“The Uneducated American”), Paul Krugman writes that, “for the past 30 years our political scene has been dominated by the view that any and all government spending is a waste of taxpayer dollars.” As a result, Krugman continues, U.S. education has been “neglected” and “has inevitably suffered.”

Readers who put their trust in Krugman might thus conclude that per pupil spending has stagnated or declined. In reality, as the chart below reveals, it has more than doubled since 1970, after adjusting for inflation.

Paul Krugman may not be an “uneducated American,” but he’s certainly a badly misinformed one.

andrew coulson cato education spending

Much more troubling is the fact that Krugman and the Times are spreading this misinformation on a grand scale. And that got me thinking about Jon Stewart. When Time magazine recently asked Americans to name their most trusted newscaster, the comic and Daily Show host won in a landslide.  Many pundits have taken this as a sign of the Apocalypse, worrying that so many Americans are getting their facts from a presumptively unreliable source. But is the Daily Show really less reliable than Paul Krugman and the New York Times?

To find out how they stack up on this particular question, I Googled the Daily Show’s website for any discussion of education spending. The most relevant hit was an exchange in the show’s on-line forum. In it, a commenter claims that spending per pupil has risen by a factor of 10 since 1945, after adjusting for inflation. That’s not too far off the mark. The actual multiple is just under 8. So folks who get their facts from the Daily Show’s website will be better informed on this subject than those who trust the Nobel Prize winning New York Times economist.

Not only is Krugman wrong to claim that public schools have been financially “neglected,” he is wrong to imagine that higher public school spending spurs economic growth – which is the central point of his column. Better academic achievement does help the economy – but, as the chart above illustrates and many scholarly studies have demonstrated, higher public school spending does not improve achievement. And by raising taxes without improving achievement, it may actually slow economic growth.

Media elites have been wringing their hands over the collapse in public demand for their products, over the two thirds of Americans who now doubt their credibility, and over the fact that more people now get their information from the Daily Show’s website than the New York Times’s.

Perhaps the media might attract more readers and rebuild trust if they were to stop publishing material less reliable than the blog discussions on a comedy show’s website. Just a thought.

Climate Change and Health Care: Free Lunches?

In the debate over health care reform, advocates of expanded government health insurance suggest we can pay for this by making Medicare and Medicaid more efficient.

In Paul Krugman’s most recent column, he makes a similar claim about reducing greenhouse gas emissions:

The evidence suggests that we’re wasting a lot of energy right now. That is, we’re burning large amounts of coal, oil and gas in ways that don’t actually enhance our standard of living — a phenomenon known in the research literature as the “energy-efficiency gap.” The existence of this gap suggests that policies promoting energy conservation could, up to a point, actually make consumers richer.

Both claims of a “free lunch” are heroic, at best.

In the case of health insurance, Medicare and Medicaid are inefficient, but to make them more efficient we have to reduce government subsidy for health insurance, not expand it.

In the case of energy efficiency, more energy-efficient practices exist (e.g., replacing incandescent light bulbs with CFLs), but they are expensive: if they actually made consumers richer, most would be using them already.

Now the fact that expanded government health insurance and increased energy efficiency would cost more, not less, does not prove they are bad ideas (that’s a separate discussion). But it means society must evaluate a tradeoff, not just assert we can have something for nothing.

C/P Libertarianism, from A to Z

Tuesday Links

  • Paul Krugman claims a victory for Big Government, which he says “saved” the economy from an economic depression. Alan Reynolds debunks his claim and shows why bigger government  produces only bigger and longer recessions.
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The Boys Who Cried “Racist”

Some people on the left can’t see any excuse for opposition to collectivism except racism. (Which is, of course, as Ayn Rand said, “the lowest, most crudely primitive form of collectivism.”) Today it’s Paul Krugman:

But they’re probably reacting less to what Mr. Obama is doing, or even to what they’ve heard about what he’s doing, than to who he is.

That is, the driving force behind the town hall mobs is probably the same cultural and racial anxiety that’s behind the “birther” movement, which denies Mr. Obama’s citizenship.

That is, Paul Krugman can’t understand why people would oppose government control of health care — or skyrocketing deficits, or a federal takeover of education, energy, and finance along with health care — unless they’re driven by racism. But he’s not the only one who sees racists under every bed. Take Washington Post cultural writer Philip Kennicott yesterday, in an essay titled “Obama as the Joker: Racial Fear’s Ugly Face”:

[T]he poster is ultimately a racially charged image. By using the “urban” makeup of the Heath Ledger Joker, instead of the urbane makeup of the Jack Nicholson character, the poster connects Obama to something many of his detractors fear but can’t openly discuss. He is black and he is identified with the inner city, a source of political instability in the 1960s and ’70s, and a lingering bogeyman in political consciousness despite falling crime rates…

Superimpose that idea, through the Joker’s makeup, onto Obama’s face, and you have subtly coded, highly effective racial and political argument. Forget socialism, this poster is another attempt to accomplish an association between Obama and the unpredictable, seeming danger of urban life.

He’s talking about a poster that depicts Obama as the Joker from last year’s Batman movie over the word SOCIALISM. It’s not a very effective poster; what does the Joker have to do with socialism? But it’s ridiculous to see racism in it.

More serious thinkers also try to tar the entire limited-government argument with the brush of racism. Take Cass Sunstein, the celebrated Harvard law professor who has been appointed to a high position in the Obama White House. In his 1999 book with Stephen Holmes, The Cost of Rights: Why Liberty Depends on Taxes (and you wonder why Obama chose him?), he made such a sweeping argument, called out here by Tom G. Palmer:

[I]mmediately after gallantly conceding that ‘‘Many critics of the regulatory-welfare state are in perfectly good faith’’ (p. 216) they turn around to tar all critics of the welfare state with the charge of racism: ‘‘But their claim that ‘positive rights’ are somehow un-American and should be replaced by a policy of nonintervention is so implausible on its face that we may well wonder why it persists. What explains the survival of such a grievously inadequate way of thinking? There are many possible answers, but inherited biases — including racial prejudice, conscious and unconscious — probably play a role. Indeed, the claim that the only real liberties are the rights of property and contract can sometimes verge on a form of white separatism: prison-building should supplant Head Start. Withdrawal into gated communities should replace a politics of inclusion’’ (p. 216).

The classical liberal ideas of individualism, individual rights, property rights, “negative liberties,” and limited government date back hundreds, even thousands, of years. They find their roots in the Greek and Hebrew conceptions of the higher law, the Scholastic thinkers, the Levellers’ ideas of self-ownership and natural rights, the political theory of John Locke, the economic analysis of Adam Smith, and the political institutions of the American Founding. To suggest that the case for freedom and limited government — or the application of that theory to contemporary proposals for the expansion of government — must be attributable to racism is uncharitable, ahistorical, thoughtless, and indeed contemptible.

It cannot be the case that every parody of a president who happens to be black is racist. And it is not good for democracy to try to counter every opposing argument with such a blood libel. The good news for advocates of limited government is that our opponents are displaying a striking lack of confidence in the actual arguments for their proposals. If they thought they could win a debate on nationalizing health care, or running trillion-dollar deficits, they wouldn’t need to reach for such smears.

Just Say No to Public Option Health Care

In today’s New York Times, Paul Krugman writes about the necessity of a public option in health care. Why is a public plan such a bad idea? I explain in my post over at The Corner:

A public plan, regardless of how it was structured or administered, would have an inherent advantage in the marketplace over private insurance companies because it would ultimately be subsidized by American taxpayers. It would also have an advantage since its enormous market presence would allow it to impose much lower reimbursement rates on doctors and hospitals, similar to current reimbursement practice under Medicare and Medicaid. It is estimated that privately insured patients presently pay $89 billion annually in additional insurance costs because of cost-shifting from government programs. Assuming the new public option would have similar reimbursement policies, it would result in additional cost-shifting as much as $36.4 billion annually. This would force insurers to raise their premiums, making them even less competitive with the taxpayer-subsidized public plan.

With the public option squeezing private insurers from the sides, and expanded eligibility for Medicare and Medicaid pushing from the top and bottom, it is unlikely that any significant private insurance market could continue to exist. America would be firmly on the road to a single-payer health care system with all the dangers that presents.

Cohn vs. AFP

The New Republic’s Jonathan Cohn accuses Americans for Prosperity (AFP) of “lies” for running an ad that claims “Washington wants to bring Canadian-style healthcare to the U.S.”

AFP’s ad is more defensible than Cohn’s criticisms of it.

Cohn elides the question of whether Shana Holmes (the woman featured in the ad) was almost killed by Canada’s Medicare system.  For a supporter of single-payer like Cohn, that is tantamount to admitting that, yeah, socialized medicine sometimes kills people.

Cohn argues that the ad is unfair because Canada has many advantages over the U.S. health care sector.  That may be true, but the ad doesn’t appear to defend American health care.  It merely says, “government should never come in between your family and your doctor” and “Don’t give up your rights.”  That’s not pro-American health care or anti-reform.  It’s just anti- the type of reform that Cohn wants.  And it points to one area where our semi-socialized U.S. health care sector appears to be superior to Canada’s: quicker access to intensive treatments.  Sometimes, that saves lives.  In fact, AFP could go farther and say that the United States has another edge over Canada, in that we develop nearly all of the best new medical technologies.  In fact, our medical technologies save Canadian lives, but Canada’s health care system (and its supporters) steal the credit.

Yet “the real lie,” Cohn claims, is that the ad suggests that “Washington” wants to impose a Canadian-style system on the United States.  Cohn calls that claim “demonstrably false.” But consider:

  • President Obama has said he would prefer single-payer and has hinted that he would like to make incremental changes in that direction.
  • Many people who support a new public plan (e.g., Paul Krugman) do so because they believe it will lead to single-payer.
  • Massachusetts, which has already implemented most of the reforms that Obama and congressional Democrats are considering, is now contemplating a large leap toward Canadian-style health care by imposing capitation on its entire health care sector.
  • Government rationing becomes increasingly likely as government revenues fail to keep pace with the cost of government’s health care promises.  (See again, Massachusetts.)
  • The Left wants government to ration care.  That’s the point of the comparative-effectiveness research funding.  That draft House Appropriations Committee report committed a classic Washington gaffe when it said that certain treatments “would no longer be prescribed,” because it was admitting the truth.

Cohn is correct that no politician of influence is saying she wants to impose a Canadian-style system on the United States.  But I prefer to pay attention to what they’re doing.

AFP: 1.  Cohn: 0.