Wednesday, June 20, 2012

Economic Nonsense

Paul Krugman was on Rachel Maddow on Monday. She spoke for five minutes first, giving her own expert opinion on the economy, then she had Krugman on for four minutes and allowed him to talk for two minutes about his expertise on the economy. Her questions were longer than his answers and it was, to say the least, not very illuminating.

Mostly they talked about providing jobs for school teachers. I had the rather foolish impression that schools were for the purpose of educating children, but apparently I am behind the times, because these days schools have the primary purpose of providing jobs for teachers.

San Diego is facing budget cuts in the education system, and all of the talk is about “teachers facing layoffs.” When some funding was salvaged the headline was about how many “teachers’ jobs were saved.” There was never any discussion regarding the effect on the children attending the schools.

Anyway, Paul Krugman talked about 600,000 teachers being laid off and the effect on unemployment, and that if we could have saved those jobs, or if we could return those 600,000 teachers to work that “unemployment would be down around 7% and we would not have this depression.”

Seriously? We lost 14 million jobs since the beginning of this depression. The recovery, according to Obama, of 4.3 million jobs brought unemployment down just under two points, and 600,000 jobs is going to bring it down more than another full point?

Krugman and Maddow agreed that we should be adding more government jobs because “they are real jobs” and because government workers spend money and that “consumer spending” helps the overall economy. What neither of them considers is that the money that government workers are spending comes out of the pockets of non-government workers, which reduces those people’s ability to spend. If you take money out of one pocket and put it in a different pocket you have not increased your wealth.

But that’s the way modern economic theory works today. The solution to an economy which crashed due to excess debt is to borrow more money. Moving money from one place to another place creates wealth. Labeling bad debt as good debt restores a balance sheet to health. Endless bullshit and insanity.

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