Monday, January 3, 2011

Dueling Views of the World: Krugman v. Samuelson

Interesting comparison available this morning for those who care to dive in.  NYT Columnist Paul Krugman and WaPost Columnist Robert Samuelson have columns up that provide amateur economists with a pretty solid sense of the scope of mainstream economics.

On the one hand, we have Krugman:  So what can be done to accelerate this all-too-slow process of healing? A rational political system would long since have created a 21st-century version of the Works Progress Administration — we’d be putting the unemployed to work doing what needs to be done, repairing and improving our fraying infrastructure. In the political system we have, however, Senator-elect Kelly Ayotte, delivering the Republican weekly address on New Year’s Day, declared that “Job one is to stop wasteful Washington spending.”  Basically, a "government didn't do enough" approach to accelerating the recovery, even after we've seen how ridiculously slow and inefficient such "spending" has been in providing any stimulus.

On the other hand, we have SamuelsonThe trouble is that Obama, having stabilized the economy, weakened the recovery. What's missing from Summers's valedictory is any sense of contradiction between the administration's ambitious social and regulatory agenda and the business confidence necessary for hiring and investing. Of course, the connections existed. The health-care law raises hiring costs by requiring in 2014 that all firms with more than 50 employees provide health insurance or be fined. The law brims with complexities and uncertainties that make it hard to estimate the ultimate costs. Will firms with, say, 47 workers eagerly expand beyond 50 if that imposes all the extra costs? It seems doubtful.
Choices had to be made. The administration could either concentrate on promoting recovery or devote itself to more narrow and, usually, partisan objectives. It couldn't do both - at least, it couldn't do both effectively. Obama's solution was to pretend the choices didn't exist. The first hints of this occurred in the "stimulus" package, which provided money for some pet projects that provided precious little stimulus. Until last week, for example, only about 20 percent of the $8 billion committed to high-speed rail had been disbursed. Planning these massive projects takes time. 

So there you have it--Krugman tells us that the key to continuing recovery is for the government to spend more money and Samuelson tells us that the key to recovery is the government ceasing anti-business policies.  I'm with Samuelson.  


Goldwater's Ghost said...

Don't forget your Friedman: if we were living under a can-do government like China's, we wouldn't have to choose.

"The Hammer" said...

The stimulus was about paying off constituencies that didn't have access to the vast pool of gov't money for eight long years. That's it. It's all about spreading the spoils and keeping your people happy, the same as Stalin, Saddam Hussein, Hugh Chavez, Boss Tweed, Mayor Daley, Castro and every other thug since the beginning of time.
What gets me is people fell for this hope and change BS when all the guy knows is the same old same old.

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