Wednesday, 26 November 2014 / TRUTH-OUT.ORG

Following a Disaster, Disastrous Suggestions

By Paul Krugman, Truthout | Op-Ed
Following a Disaster Disastrous Suggestions

Hurricane Irene caused flooding in Paterson, New Jersey. (Photo: Fred R.Conrad / The New York Times)

Steve Landsburg, the author and economics professor at the University of Rochester, critiqued my recent critique of demands by Eric Cantor, a Republican congressman from Virginia and the House majority leader, that emergency relief in the United States in the wake of Hurricane Irene be offset by spending cuts elsewhere. But I think that he missed the point.

On Aug. 31, Mr. Landsburg wrote on his blog: “Krugman thinks this is silly, and proves his point with an appeal to the standard Ricardian theory of public finance. … if you’ve got to bear a cost, it’s best to spread that cost out over as many activities as possible.”

He continues: “Since Krugman has carelessly neglected to spell out an important detail of his argument, let me fill in the gap for him: The Ricardian conclusion does not come from thin air; instead it follows logically from certain premises, key among which is that you’re starting from an ideal policy regime.”

Mr. Landsburg points out, correctly, that the proposition that a spending increase should be offset with a little bit of pain everywhere and everywhen — that is, with higher current and future taxes and lower current and future spending on many things — follows from assuming that the government starts from a position of doing the right thing.

If you think the government’s priorities are all wrong, then theory doesn’t tell you much about what should happen.

But wait: Eric Cantor is the one claiming that there’s a principle here, that any spending rise on disaster relief must be offset with current spending cuts.

I’m critiquing that assertion; there is no such principle. I should be clear on that.

Where Mr. Landsburg really goes where he shouldn’t, though, is by comparing Cantor’s proposal to denying someone goodies unless he shapes up elsewhere — he uses the example of a teenager who won’t be allowed to go to the prom unless he does his chores. Is that really a good metaphor for what’s happening here?

Remember, Mr. Cantor isn’t denying something called “the government” the right to do something it wants to do. He’s denying disaster relief to people hard hit by a hurricane. That is, he’s holding suffering Americans hostage to his goal of smaller government.

And the whole point of his offsetting spending cuts thing — his invention of a nonsense principle — is to obscure the ruthlessness of the blackmail involved.

Is this really a tactic you want to defend?

Truthout has licensed this content. It may not be reproduced by any other source and is not covered by our Creative Commons license.

Paul Krugman joined The New York Times in 1999 as a columnist on the Op-Ed page and continues as a professor of economics and international affairs at Princeton University. He was awarded the Nobel in economic science in 2008.

Mr Krugman is the author or editor of 20 books and more than 200 papers in professional journals and edited volumes, including "The Return of Depression Economics" (2008) and "The Conscience of a Liberal" (2007). Copyright 2011 The New York Times.


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Following a Disaster, Disastrous Suggestions

By Paul Krugman, Truthout | Op-Ed
Following a Disaster Disastrous Suggestions

Hurricane Irene caused flooding in Paterson, New Jersey. (Photo: Fred R.Conrad / The New York Times)

Steve Landsburg, the author and economics professor at the University of Rochester, critiqued my recent critique of demands by Eric Cantor, a Republican congressman from Virginia and the House majority leader, that emergency relief in the United States in the wake of Hurricane Irene be offset by spending cuts elsewhere. But I think that he missed the point.

On Aug. 31, Mr. Landsburg wrote on his blog: “Krugman thinks this is silly, and proves his point with an appeal to the standard Ricardian theory of public finance. … if you’ve got to bear a cost, it’s best to spread that cost out over as many activities as possible.”

He continues: “Since Krugman has carelessly neglected to spell out an important detail of his argument, let me fill in the gap for him: The Ricardian conclusion does not come from thin air; instead it follows logically from certain premises, key among which is that you’re starting from an ideal policy regime.”

Mr. Landsburg points out, correctly, that the proposition that a spending increase should be offset with a little bit of pain everywhere and everywhen — that is, with higher current and future taxes and lower current and future spending on many things — follows from assuming that the government starts from a position of doing the right thing.

If you think the government’s priorities are all wrong, then theory doesn’t tell you much about what should happen.

But wait: Eric Cantor is the one claiming that there’s a principle here, that any spending rise on disaster relief must be offset with current spending cuts.

I’m critiquing that assertion; there is no such principle. I should be clear on that.

Where Mr. Landsburg really goes where he shouldn’t, though, is by comparing Cantor’s proposal to denying someone goodies unless he shapes up elsewhere — he uses the example of a teenager who won’t be allowed to go to the prom unless he does his chores. Is that really a good metaphor for what’s happening here?

Remember, Mr. Cantor isn’t denying something called “the government” the right to do something it wants to do. He’s denying disaster relief to people hard hit by a hurricane. That is, he’s holding suffering Americans hostage to his goal of smaller government.

And the whole point of his offsetting spending cuts thing — his invention of a nonsense principle — is to obscure the ruthlessness of the blackmail involved.

Is this really a tactic you want to defend?

Truthout has licensed this content. It may not be reproduced by any other source and is not covered by our Creative Commons license.

Paul Krugman joined The New York Times in 1999 as a columnist on the Op-Ed page and continues as a professor of economics and international affairs at Princeton University. He was awarded the Nobel in economic science in 2008.

Mr Krugman is the author or editor of 20 books and more than 200 papers in professional journals and edited volumes, including "The Return of Depression Economics" (2008) and "The Conscience of a Liberal" (2007). Copyright 2011 The New York Times.


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