Divided We Fail

http://http//www.nytimes.com/2010/10/29/opinion/29krugman.html?partner=rssnyt&emc=rss

Krugman is playing political pundit this week. I won't respond much to his political claims. I'm no expert on the political process. In fact, Krugman and I are both political dilettantes. The difference is that I'm aware of my limitations; Krugman is not. I will only comment on the obviously dishonest statements:

"Another recent interview by National Journal, this one with Mitch McConnell, the Senate minority leader, has received a lot of attention thanks to a headline-grabbing quote: “The single most important thing we want to achieve is for President Obama to be a one-term president.”"

Wow, those bastard Republicans want a Republican president? They really should learn from the Democrats, who gave such whole-hearted support to George Bush getting elected for a second term. I mean, the Democrats never said a bad word about Bush, or expressed a desire to see Bush lose in 2004. Shame on the Republicans.

"True, Mr. McConnell did say that he might be willing to work with Mr. Obama in certain circumstances — namely, if he’s willing to do a “Clintonian back flip,” taking positions that would find more support among Republicans than in his own party. Of course, this would actually hurt Mr. Obama’s chances of re-election — but that’s the point."

Wow, Republicans only want to support policies that they agree with? Again, this narrow-mindedness is appalling. When I think back to the way that the left embraced Bush's tax cuts, the PATRIOT Act, the Iraq War, etc., it really is shameful.

Snarkiness aside, Krugman makes the bizarre criticism, also levelled at the Tories, that it is somehow dishonest or seedy for a political party to actually act in accordance with its ideology. Its somehow nefarious that a political party will only support policies that it agrees with. This is such a bizarre argument -- basically political parties should have no policy preferences in Krugman's world, or, more accurately, conservative political parties should never actually support right-wing policies, or oppose left-wing policies. In other words, the right should simply go away, and let Obama do whatever he wants.

"When Republicans took control of Congress in 1994, the U.S. economy had strong fundamentals. Household debt was much lower than it is today. Business investment was surging, in large part thanks to the new opportunities created by information technology — opportunities that were much broader than the follies of the dot-com bubble."

Unless Krugman can identify a policy that was enacted in 1993 that caused economic growth, Krugman concedes that Reagan and Bush I's policies laid the groundwork for economic growth.

"In this favorable environment, economic management was mainly a matter of putting the brakes on the boom, so as to keep the economy from overheating and head off potential inflation."

Since according to Krugman the economy managed itself, Clinton's policies had nothing to do with economic growth in 1990s.

"But we won’t get those policies if Republicans control the House. In fact, if they get their way, we’ll get the worst of both worlds: They’ll refuse to do anything to boost the economy now, claiming to be worried about the deficit, while simultaneously increasing long-run deficits with irresponsible tax cuts — cuts they have already announced won’t have to be offset with spending cuts."

The irony is risible -- Krugman, who routinely advocates massive deficits -- is calling the Republicans irresponsible for running deficits. Krugman no doubt also bashed Bush for running a deficit, while advocating the same policy for Obama. Let's give a quick summary of Krugman's "analysis": Democrats' deficits are good, Republicans' deficits are bad. This sort of commentary underscores what a dishonest partisan hack Krugman is.

Of course, Krugman's point that Republicans have a poor record of deficit spending is valid; the Republicans have been extremely irresponsible in the past, and no doubt will be in the future. The issue isn't Republican vs. Democrat, or ideological, its strictly a matter of the incentives that all politicians, regardless of party affiliation, face. Balancing budgets requires spending cuts or tax increases, both of which are political suicide. So, a rational politician will always seek immediate benefits and deferred costs, aka a deficit. A rational politician only cares about the next election; if he loses, his discount rate beyond the day he leaves office is 100%. However, a citizen, who will actually have to pay taxes down the road to cover the deficits, has a discount rate far less than 100%. In other words, politicians and their constituents have very different, and arguably opposing, incentives. This explains why Democrats and Republicans both run deficits, with the federal government running a deficit something like 38 of the last 42 years.

Krugman, as an economist, should understand that people respond to incentives. Hoping, as Krugman does, that politicians will miracuously improve as people and act contrary to the incentives that they face is, to put it charitably, naive. If you believe that people generally respond to the incentives they face, and pursue their self-interest, it follows that limited government is best. That is why, though I will defend Republicans from Krugman's hypocritical, partisan attacks, I would never argue Republicans are good or ethical leaders in any absolute sense. I'm not a Republican, I'm a libertarian.