[Vision2020] Nobel Economist Krugman: Norquist's Lake: What's next? Rejecting Evolution? Oh wait...

[Ted Moffett]

http://krugman.blogs.nytimes.com/

November 28, 2011, 12:28 pm

Drowning in Grover’s Lake

Never mind drowning the US government in a bathtub: Grover Norquist is
trying to drown the whole economy in a lake:

The idea that if you take a dollar out of the economy and then — from
somebody who earned it, either through debt, or through taxes — and
give it to somebody who’s politically connected, that there are more
dollars around, that if you stand on one side of the lake and put a
bucket into the lake, and walk around to the other side in front of
the TV cameras, pour the bucket back into the lake and announce you’re
stimulating the lake to great depths. We just wasted $800 billion on
stimulus spending that added to debt, that killed jobs.

OK, this is just Say’s Law. We don’t know whether Norquist is honest
enough with himself to realize that exactly the same logic applies to
any spending, that according to his story anyone who borrows to spend,
including companies making investments, is just displacing someone
else’s spending. To his credit, Brian Riedl more or less admitted that
when he made the same argument a couple of years ago.

But it’s all wrong, of course. Income can fall to match spending,
instead of spending rising to match income — that’s the moral of the
babysitting coop story, which I like because it offers an intuitive
way to cut through the word games of demand denialists. Too bad that
so many prominent economists fall into the same fallacy.

And it really is very disturbing that arguments like this, arguments
that were thoroughly refuted three generations ago, are playing a
major role in political debate. I mean, what’s next? Will they start
rejecting the theory of evolution? Oh, wait.
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Vision2020 Post: Ted Moffett