Mere minutes after the earth stopped shaking yesterday, The Examiner‘s Tim Carney tweeted out: “Krugman says it wasn’t big enough.” Carney was making light of New York Times columnist Paul Krugman’s faith in Keynesian economics, which preaches that when the economy is not utilizing all of its productive capacity, increased spending on anything, even digging ditches, can increase economic growth. Just like Krugman has been arguing that President Obama’s $821 billion stimulus was not big enough, Carney mockingly predicted that Krugman would also complain that the earthquake failed to do enough damage to justify a large rebuilding spending spree.
Four hours later, Krugman lived up to Carney’s joke, writing on his Google+ account: “People on twitter might be joking, but in all seriousness, we would see a bigger boost in spending and hence economic growth if the earthquake had done more damage.”
Some thought Krugman’s pining for more damage was so outrageous that the Google+ post was a hoax. Maybe it is. [UPDATE: It is a hoax!] But Krugman’s quake statement is perfectly in line with everything else he has ever said on the subject. After 9/11, Krugman wrote: “Ghastly as it may seem to say this, the terror attack — like the original day of infamy, which brought an end to the Great Depression — could even do some economic good.” In 2008 he said on This Week: “it took an enormous public works program known as World War II to bring the economy out of a Depression.” And just recently Krugman suggested that massive government defense spending to prevent a fictional alien invasion could also spur economic growth.
But what happens when the aliens don’t attack? Wouldn’t all that spending on anti-alien rays be wasted? Yes. But the Church of Keynsianism doesn’t care. As long as government policy is driving up spending, it doesn’t matter what the government spends the money on or what else gets destroyed in the process.
This is the same thinking that drove the Obama Administration’s Cash for Clunkers program. Over 500,000 perfectly operational cars were destroyed in an effort to create more spending in the auto industry. But the program proved to be a miserable failure. Studies have since shown that the the car-destroying program did not create any additional spending. It only shifted when that spending took place. But while Cash for Clunkers created no economic growth, it did make many low-income households worse off. With hundreds of thousands of used cars now off the market, used car prices shot up. Now it is harder for millions of Americans to get where they need to go.
Hopefully this earthquake, and Krugman’s pining for more destruction, will help disabuse more in Washington of the Keynesian myth.
Around the Bigs
The Washington Post, Libyan rebels storm Gaddafi compound in Tripoli: Rebels overran Moammar Gaddafi’s s fortified Bab al-Aziziya compound in Tripoli Tuesday but Gaddafi was nowhere to be found. Gaddafi loyalists still control at least two major towns in the country and they managed to launch an attack on the Tripoli airport Tuesday night.
The Wall Street Journal, Moody’s Cuts Japan’s Credit Rating: Citing citing “large budget deficits and the build-up in Japanese government debt since the 2009 global recession,” Moody’s Investor Service cut Japan’s credit rating from AAA to AA yesterday. Japan’s ruling party is scheduled to select a new prime minister next week.
The New York Times, Oil Reserves Sidestep U.S. Vessels: Obama has waived the Jones Act 46 times since he ordered the release of oil from the Strategic Petroleum Reserve allowing only foreign flagged vessels to transport the reserves to markets. Domestic ship owners say the waivers have put as many as 400 sailors’ jobs at risk.
Bloomberg, New-Home Sales in U.S. Declined in July to the Lowest Level in Five Months: New home sales declined 0.7 percent to the lowest level in five months. “Without any meaningful job growth, we’re going to continue to look at a housing sectors that is moribund,” TD Securities Eric Green told Bloomberg.
Campaign 2012
Iowa: According to a new poll from Public Policy Polling, Texas Gov. Rick Perry is the new leader in Iowa at 22%. Former Massachusetts Gov. Mitt Romney comes in second with 19%, Rep. Michele Bachmann, R-Minn., is third at 18%, and Rep. Ron Paul, R-Texas, is fourth at 16%.
Obama: Obama does a lot better against Perry in PPP’s first head-to-head poll with the Texas governor, than he does against Romney. Obama leads Perry 49-43 while he ties Romney at 45. The difference comes among independents who prefer Obama by a 24-point, 56-32 margin.
Perry: According to Gallup, Perry is surging in name recognition while maintaining his positive image. Sixty-Seven percent of Republicans now recognize Perry’s name compared to just 54 percent two weeks ago. Meanwhile the percentage of Republicans who have a strongly favorable opinion of him is 22 points higher than the percentage of Republicans that have a strongly negative view of him. Outside of Herman Cain, that is the best positive image spread of any candidate in the field.
Righty Playbook
The Examiner rounds up some earthquake twitter humor, including: “@BrianHughes_: I wish I owned a bar in D.C. right now. #chaching”
Townhall‘s Guy Benson posts a clarification from Vice President Joe Biden’s office about his one-child-policy China comment, and writes: “here’s the clip of Biden arguing against the One Child Policy to a Chinese audience. Do you detect any revulsion here?”
The Corner‘s Kathryn Jean Lopez posts video from Sen. Marco Rubio’s, R-Fla., speech at the Reagan Library tonight, including: “The free enterprise system has lifted more people out of poverty than all the government anti-poverty programs combined.”
Lefty Playbook
The Huffington Post‘s Sam Stein reports that the Democratic National Committee is preparing to launch a campaign to pressure Republicans to extend the payroll tax cut past the end of 2011.
Salon‘s Steve Kornacki hopes Sarah Palin will get into the presidential race so she will suffer an “epic, humiliating defeat, the sort of disaster that might once and for all convince the political and media worlds that the empress has no clothes.”
The New Republic‘s Jonathan Chait argues that Perry’s push for the repeal of the 16th Amendment is meant to fight the federal government’s power to redistribute wealth.
