On Economics, Prudence over Prophecy

Paul Krugman speaks with reporters after meeting with Japanese Prime Minister Shinzo Abe in Tokyo in 2016. (Franck Robichon/Pool/Reuters)
Defenders of the so-called Green New Deal stack the rhetorical deck.

Paul Krugman gets teased from time to time for once having predicted that the Internet, then in its adolescence, would prove no more significant a technological advancement than the fax machine. Professor Krugman has of course since confessed his error, which, while embarrassing, is not relevant to most of what he writes.

With exceptions.

Writing in the New York Times, the economist-turned-partisan-carnival-barker heaps scorn on the question of how to pay for the grand promises put forward in the so-called Green New Deal. He is not the first to do so: Representative Alexandria Ocasio-Cortez, the current mascot of the socialist movement, sneered that the same people asking about how to pay for the Green New Deal would, had they been around at the time, have demanded the same thing of Dwight Eisenhower regarding the Interstate Highway System. The honorable lady from the Bronx has on occasion made it plain that she is lightly educated about the institution in which she serves. (She seems to be somewhat vague about how a bill becomes a law and what it is that Congress does.) As a matter of fact, the question of how to pay for Eisenhower’s folly was hotly debated at the time — and remains an item of contention. (E.g., “Highway Trust Fund is on fumes and time is running out,” The Hill, May 18, 2018.)

Professor Krugman is something of a specialist in lending his Nobel-laureate prestige to poorly considered political proposals (that is his function; it is impossible to believe that even the sworn enemies of the English language who edit the New York Times opinion pages keep him around for his prose), and on the Green New Deal he performs as required: “To the extent that it’s a public investment program, demands that its supporters show how they’ll pay for it show more about the critics’ bad economics than about the GND’s logic.”

To the extent that it’s a public-investment program . . .

Well.

“Public investment” is a favorite incantation associated with progressive magical thinking — investments that purportedly “pay for themselves” are the Democrats’ answer to the deathless Republican superstition of tax cuts that “pay for themselves.” As with the relationship between the occult ministrations of the Paraclete and papal pronunciations ex cathedra, there is an element of logical circularity and question-begging in the formulation. What counts as a “public investment”?

Professor Krugman offers this: “The defining characteristic here is that it’s spending that will enhance society’s future productivity.” And how do we predict with confidence the productivity-enhancing outcome of such spending? Professor Krugman does not offer very much guidance, only dismissing the deficit scolds to declare: “If you can raise funds cheaply and apply them to high-return projects, you should go ahead and borrow.” The implication there — in the comparison between cost of borrowing and return on spending — is that spending on “public investment” pays for itself because “public investment” is defined as spending that pays for itself in the form of increased productivity.

There is an obvious speculative element in that which is not, strictly speaking, a question of economics at all. I share Tom Nichols’s despair at the “death of expertise,” but the experts have some blood on their hands, too, inviting contempt and skepticism by pretending, as Professor Krugman does here, that political and social questions are instead technical questions.

Which brings us back to the Internet-as-glorified-fax machine. Professor Krugman is an intelligent man, but he entirely failed to understand the significance of the Internet. What are the chances that a committee comprising considerably less intelligent people is going to, say, rebuild the entire U.S. electricity-generating apparatus and the grid that distributes it while making good judgments about the vastly complex technological and logistical questions involved? Of course, they’ll have access to expert advisers — like Paul Krugman.

If expertise in mere economics were sufficient to predict the evolution of something as complex as the U.S economy, then it would be impossible for an economist such as Krugman to make a flub like the one he made about the Internet. But he wasn’t being asked an economic question — and neither are the people presented with the vague and unserious agenda summarized in the so-called Green New Deal.

Expect flubs. They are not the exception.

California’s newly elected Democratic governor, Gavin Newsom, has partly pulled the plug on a very large and very expensive “public investment” in his state, an abortive high-speed-rail line that would have connected Los Angeles to San Francisco, for reasons that must remain mysterious to anyone familiar with the cutting-edge technology of . . . 1967. (As of this writing, the best deal on a nonstop 90-minute LAX–SFO flight is $97, round-trip.) Hilariously — honestly, I thought this was a joke when first I heard it — Governor Newsom intends to go ahead and build out the part of the line that already has been begun, meaning that billions of dollars will have been invested in a bullet train connecting Merced to Bakersfield across a stretch of ghastly blasted desert and exurbia, bisecting downtown Fresno in a route that all but demands to be crossed at irresponsible speed in a brown 1977 Camaro.

The “investment” went about the way you’d expect: “Delays and skyrocketing costs have been the norm,” as the Fresno Bee gently put it.

Until there is a reliable economic model that accounts for the greed, mendacity, ideological rigidness, partisan self-interest, and incompetence of the people who decide what counts as an “investment” and how such alleged investments are managed — and also for a broader political system so deformed that a witless yokel such as Alexandria Ocasio-Cortez has been elevated to a prominent position within it — then this is not really a question of economics. It is a question of politics, and a question of prudence.

And, in that context, “How the hell do you propose to pay for that?” is an eminently sensible question.

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