I’ve poked fun at Paul Krugman for his views on health care and British fiscal policy, and I’ve semi-defended him about unemployment subsidies and housing bubbles.
Now it’s time for some more mockery.
Back in 2001, Paul Krugman received some much-deserved criticism for stating that the 9-11 terrorist attacks would be stimulative for the economy.
He committed the “broken-window” fallacy, explained more than 150 years ago by a famous French economist, Frederic Bastiat.
Breaking a window at the local bakery, Bastiat explained, might generate business for the town glazier, but only at the expense of some other merchant, like a tailor, who would have benefited if the baker didn’t have to spend money on a new window.
In other words, the destruction of wealth is not good for an economy. At best, it makes us poorer and then shifts how current income is allocated. This is why Bastiat wrote (perhaps predicting the emergence of Krugman):
There is only one difference between a bad economist and a good one: the bad economist confines himself to the visible effect; the good economist takes into account both the effect that can be seen and those effects that must be foreseen.
But we have to give Krugman credit for a bizarre form of ideological consistency. He is willing to advocate bigger government, no matter how sloppy the reasoning or how quirky the rationale.
His latest outburst was to say on CNN how wonderful it would be for the economy if the people of earth mistakenly thought we were on the verge of an alien invasion, which would lead to lots of military spending.
He even cited an episode of Twilight Zone to justify his assertions. I’m surprised he didn’t also mention the 1996 film, Independence Day.
As I wrote in a previous blog post, this is one of those moments when your only response is to say “wow.” This is even worse than when Keynesians assert that it would be stimulative to pay people to dig holes and fill them in again.
For those who want more info on why government spending does not boost the economy in the short run, here’s my video on Keynesian economics.
And if you want to know why government spending does not boost the economy in the long run, here’s a video looking at some empirical evidence about economic performance and the size of the public sector.
International Liberty 
[…] Indeed, Bastiat’s wise words about the “seen” and “unseen” help to explain why Krugman makes so many mistakes. […]
[…] make similar points in this post mocking Krugman’s wish for an alien invasion and this post explaining why Obama’s green energy programs lead to net job […]
[…] Indeed, Bastiat’s wise words about the “seen” and “unseen” help to explain why Krugman makes so many mistakes. […]
[…] Indeed, Bastiat’s wise words about the “seen” and “unseen” help to explain why Krugman makes so many mistakes. […]
[…] Indeed, Bastiat’s wise words about the “seen” and “unseen” help to explain why Krugman makes so many mistakes. […]
[…] probably won’t be surprised to learn that Paul Krugman is in this […]
[…] But Krugman will argue that the government should have squandered even more money. Heck, he even asserted that the 9-11 attacks were a form of stimulus and has argued that it would be pro-growth if we faced the threat of an alien invasion. […]
[…] But neither of these hypotheses is remotely plausible (though if I had to pick, I’d go with the alien invasion for the simple reason that it would bring great joy to Paul Krugman). […]
[…] seem to believe that government can artificially boost growth. They claim terrorist attacks and alien attacks can be good for growth if they lead to more spending. They even think natural disasters are good […]
[…] seem to believe that government can artificially boost growth. They claim terrorist attacks and alien attacks can be good for growth if they lead to more spending. They even think natural disasters are good […]
[…] to pay people to dig holes and then pay them to fill the holes. Or, in Krugman’s case, to hope for alien attacks. No wonder it’s so easy to mock […]
[…] But neither of these hypotheses is remotely plausible (though if I had to pick, I’d go with the alien invasion for the simple reason that it would bring great joy to Paul Krugman). […]
[…] But neither of these hypotheses is remotely plausible (though if I had to pick, I’d go with the alien invasion for the simple reason that it would bring great joy to Paul Krugman). […]
[…] Advocates of Keynesian economics make some very weird arguments to justify more government […]
[…] And it appears that Japanese politicians are happy to take advice when it’s based on their spending vice ostensibly being a fiscal virtue. That’s not too shocking, but the Keynesian scheme that’s being prepared is a parody even by Krugmanesque standards. […]
[…] That’s not too shocking, but the Keynesian scheme that’s being prepared is a parody even by Krugmanesque standards. […]
[…] That’s not too shocking, but the Keynesian scheme that’s being prepared is a parody even by Krugmanesque standards. […]
[…] stated a couple of years ago that it would be good for growth if everyone thought the world was going to be attacked by aliens […]
[…] for some economists, that’s not just a joke. (See graphic below the […]
[…] stated a couple of years ago that it would be good for growth if everyone thought the world was going to be attacked by aliens […]
[…] for some economists, that’s not just a […]
[…] that fail to consider secondary or indirect effects of government, such as Paul Krugman, are guilty of the “broken window” […]
[…] that fail to consider secondary or indirect effects of government, such as Paul Krugman, are guilty of the “broken window” […]
[…] Indeed, Bastiat’s wise words about the “seen” and “unseen” help to explain why Krugman makes so many mistakes. […]
[…] Indeed, Bastiat’s wise words about the “seen” and “unseen” help to explain why Krugman makes so many mistakes. […]
[…] P.P.S. Since this post was about the “broken window” theory of Obamacare, let’s make sure to give ultimate credit to Bastiat, who came up with the original broken windows analogy (as captured by this cartoon mocking Keynesian economics). […]
[…] Paul Krugman have claimed that war is stimulus for the economy and that it would be good if we were threatened by an alien invasion. As such, it doesn’t take too much imagination to think that conversations like this may have […]
[…] Krugman, for example, stated a couple of years ago that it would be good for growth if everyone thought the world was going to be attacked by aliens […]
[…] But maybe it’s not easy to find humor in things such as earthquakes and hurricanes. Indeed, my only attempt at disaster humor was to mock Paul Krugman for claiming the threat of an attack by space aliens would stimulate the economy. […]
[…] sort of like having a debate about sailing with someone who thinks the earth if flat. Just like Krugman, Bernstein seems to reflexively think that it’s always a good idea to have a higher burden of […]
[…] But Krugman will argue that the government should have squandered even more money. Heck, he even asserted that the 9-11 attacks were a form of stimulus and has argued that it would be pro-growth if we faced the threat of an alien invasion. […]
[…] But Krugman will argue that the government should have squandered even more money. Heck, he even asserted that the 9-11 attacks were a form of stimulus and has argued that it would be pro-growth if we faced the threat of an alien invasion. […]
[…] sort of like having a debate about sailing with someone who thinks the earth if flat. Just like Krugman, Bernstein seems to reflexively think that it’s always a good idea to have a higher burden of […]
[…] if Paul Krugman’s any indication, maybe it’s better not to be an […]
I think the Nobel prize has forfeit’ all meaning.
In the 1st decade of the 21st Century it was awarded to;
Krugman . . .
Gore . . .
Obama . . . .
I challenge anyone to find an actual, meaningful contribution to science or society amongst any of them.
Krugman’s area of expertise resides in international trade and economic theory as it relates to globalism. Today he is like a highway traffic safety expert trying to explain to us why our car doesn’t run right or drive well. What he did academically was hardly worthy of the prize. What he has said publicly explains why the committee chose him.
Gore; what can I say. He is a pariah in his own movement. That movement is increasingly finding itself called out for distortions and untruths. The last decade was warm. Warmest in some 500 years. But it wasn’t much warmer than the prior decade. And it’s not any warmer now than it was in 1934. Except they keep revising downward how warm it was in 1934. Even so; the science is fairly sound. It has gotten warmer and anthropogenic CO2 almost certainly played some role in that. What the science does not do is support all the alarmist hype. The tipping points Gore talked about are completely unsupported in the peer reviewed literature. The dangers he (and others) shouted from the rooftops are purely those of an overactive imagination. Why he was selected by the Nobel committee should be plain for all to see. It has nothing to do with his contributions to science (zero) or society (again; zero, though he did make quite a pretty penny through his prosthelytizing).
Obama? He hadn’t accomplished anything at the time he received the prize. Nothing other than get the nomination and sit atop a well managed campaign that he had little to do with running. Those of us who did look into who he was before he was elected are unsurprised by his government takeover of healthcare (yes, that is what it will be, get over it), his current talk of taking away our guns (that is what ‘nobody needs one of those’ means), and his absolute socialist perspective on the U.S. and the world at large. He may be too dumb to understand where all of this is headed, but he is certain that government should be involved and in charge of every aspect of our lives. His recent inaugural address proved that beyond any doubt (as if there were any after ‘the life of Julia’. No one should have any questions as to who he is and what he is trying to do at this point. The Nobel committee certainly knew. That is why they attempted to imbue his administration with credibility through the awarding of their prize. Gravitas you can hang around your neck!
I see what they are trying to do, but it makes the prize meaningless and endows me with an understanding of world politics I don’t care to contemplate . . . for my children’s sake. The day will come when the producers of this world will in fact have to shake off the yoke of the elites. Just in order to keep enough of the rewards to provide for themselves and their families. And over the objections of the ‘zombie class’ who no longer have the ability to provide for themselves or understand that they should.
The longer we delay that day, the more difficult the battle becomes.
Marx was not only wrong; he was polar opposite of right. Communism IS the enemy he feared. Freemarket capitalism is the socialism he thought he hated.
And the Nobel committee is blissfully unaware of the events of eastern Europe over the last 25 years.
My $0.02
[…] if Paul Krugman’s any indication, maybe it’s better not to be an […]
[…] let’s not forget his absurd assertion that it would be good for the U.S. economy if aliens threatened to […]
[…] make similar points in this post mocking Krugman’s wish for an alien invasion and this post explaining why Obama’s green energy programs lead to net job […]
@Chris Meisenzahl (@speedmaster)
You seem surprised. But Obama also has a richly-undeserved Nobel Prize, did he get it for promising to stiff the taxpayers when elected?
So how much credence can we put in the independence of the Nobel establishment nowadays?
[…] But maybe it’s not easy to find humor in things such as earthquakes and hurricanes. Indeed, my only attempt at disaster humor was to mock Paul Krugman for claiming the threat of an attack by space aliens would stimulate the economy. […]
[…] was a bit loopy, as I noted a few days ago, but other Keynesians also have been making really weird assertions. Obama’s Secretary of […]
Destruction can actually increase the GDP number. Output is not a fixed amount. The rebuilding of a broken window does not mean that a collection of products having the same value than the broken window will not be built. If output was fixed then Supply Side Economics would be nonsense because it would be impossible to increase output by lowering taxes (when tax rates are lowered investments that were unprofitable may become profitable thanks to lower tax rates).
A guy that has his house may decide to sit down idle watching TV after work and on weekends. But if this guy has his house destroyed then he would have a very big incentive to build a new house because he lacks one. He may put his stocks as collateral and take a loan to rebuild his house. He may work nights and weekends helping himself in rebuilding his house. Without the loss of his house such investment and work would never happen. Of course the loss of his house would be a colossal loss of wealth, but the result of such a colossal loss of wealth would be a higher GDP number. Of course he will consume less of other things but his outpput would be higher
Of course the destruction of houses is a disastrous way to increase the GDP number but nonetheless it is a way to increase the GDP number.
If there is a massive destruction of houses -like in Germany during World War II- then the demand for construction materials and construction manpower would bring a healthy increase in prices and credit. If the country had a world currency an increase in prices would be the result. Banks would give more credit, some prices would increase, goods and people coming from other countries searching the higher prices would somehow offset the price increase and that would essentially be all.
But if the country has his own currency and the destruction of houses is important for the country size then the Central Bank should decide how much credit to allow. A monetarist economist may kill credit alleging that he must intervene in prices impeding their (natural) rise. To that must be added the perpetual chaos caused by floating exchanges rates, with all sort of prices changing in chaotic ways thanks to exchange rate fluctuations and with higher or lower interest rates bringing changes in the exchange rate and bringing artificial changes in the prices of goods. If the Central Bank decides to raise short term interest rates then the change in the yield of short term capital and the exchange rate fluctuations may create enormous problems like bubbles and several kinds of losses.
If the Central Bank raises interest rates enough -taking enormous quantities of money away- then it will demolish credit, employment, private investment and business loans creating a recession. Milton Friedman was a very shallow monetary thinker that was unable to foresee or understand the very damaging chaos that his theories created.
But if the economist is an austrian things may get much worse. An austrian economist probably would allege that savings are actually some “fixed quantity” “loanable funds” (what the heck they are?). But in fact savings are the net worth of a society, savings are anything that can be put as collateral for a loan. Therefore there can be very big increases in the amount of funds that are loaned because people may decide to take bigger loans for instance for the rebuilding of people´s destroyed houses.
But an austrian economist based on the error that says that “loanable funds” are fixed may bring a an even bigger collapse in credit, employment, investment and business loans bringing an even bigger collapse. If such a situation is worsened with higher tax rates, massive protectionism and government spending and regulations the result may be Great Depression
The “stimulus” is about putting people back to work. People usually understand that that if a person is idle (unemployed) or if a machine is idle then output can be raised by putting them back to work and that therefore output is not fixed, it can be raised with the right incentives.
Art R, you speak as if Mr. Mitchell had magic super natural powers to read the wrong arguments that you have in your mind. At least you admit that the “stimulus” failed.
You say:
“the Keynesian stimulus has not worked because the stimulus funds eventually wound up stimulating those economies where the products that we consume are manufactured?”
Your statement is amazing: For keynesians the “stimulus” has truly magic powers, if the propensity to consume is close to one (1) then the multiplier tends to infinity. Wow! That is actually supernatural superpower.
So ALL the “stimulus” money ended in foreign countries and NOTHING remained in the USA? That is just unbelievable. It is obvious that a big part of the “stimulus” money remained in the USA (but it never “stimulated”). The keynesian multiplier is nonsense. It is a shame to Humanity that there exist economics Nobel Prize winners that believe such nonsense
Excellent videos! I am interested if you can come up with a correlation between the size of government and the “disappearing” middle class.
Seems like Krugman’s next stimulous proposal will be to fund Al-Qaeda…
…Because, as I have argued in the past, this would indeed be one of the fastest ways for Americans to acquiesce to collectivism, so that Krugman can finally implement his version of the five year Brezhnev plan for economic development and prosperity through redistribution, central planning and dismal incentives to production.
I do not know if Americans might have fallen into the vicious cycle of collectivism anyway, but my personal opinion is that the 9/11 attacks were a significant factor in collectivism rising to majoritarian status in America — a change in voter sentiment that made the Bush-Obama policy years possible. So yes, the 9/11 attacks have been very stimulative to collectivism — which seems to be Krugman’s more general philosophical goal. For Krugman, Keynesianism is probably just a tool in the advancement of the more general philosophy of collectivism.
In my view, nothing embodies more America’s path to decline than Paul Krugman.
Can’t help it but tell Americans one more time: You are adopting the ideas that are prevalent in the rest of the world, so you will wane into worldwide averagedom as others are sure to catch up.
Daniel, when will you admit to yourself that the Keynesian stimulus has not worked because the stimulus funds eventually wound up stimulating those economies where the products that we consume are manufactured? Our June merchandise trade deficit rose to $67.58 billion, which is 15% higher than 1 year ago (see HERE). Nobody, it seems, cares about our massive and unsustainable trade deficits.
And as for Japan’s “two lost decades” myth that the globalists keep regurgitating, Eamonn Fingleton positively EXPOSES it for the sham that it is.
You also fail to mention that most of the money that the US borrows is from foreign sources, not from US citizens anymore.
I read of series of Krugman NY Times articles published in our local newspapers. I had always thought that the way he attacks or defends something is really weird, far more weird than Keynesians. Now when I heard other of his quotes like one referring to 9/11, I find him monstrous.
That a Nobel holder in economics would make such a statement is deeply disturbing.