Structure of Excuses
By PAUL KRUGMAN
Thanks a lot to Paul Krugman for drawing his flawless logic just one notch too far in this article in the NYTIMES online. There's nothing that engages me more as a pupil, than when I see my teacher making a mistake.How can I use words like "flawless logic" and "mistake" about the same article?
The way I see it, logic has some serious limitations. Unless we're very careful, we tend to end up with statements that are only true because of the definitions we put into our premises. Basically, "1+1=2" is true because "2" is defined as "1+1". I get the same feeling when I see Paul Krugman's statement that (emphasis added by me):
I’ve been looking at what self-proclaimed experts were saying about unemployment during the Great Depression; it was almost identical to what Very Serious People are saying now. Unemployment cannot be brought down rapidly, declared one 1935 analysis, because the work force is “unadaptable and untrained. It cannot respond to the opportunities which industry may offer.” A few years later, a large defense buildup finally provided a fiscal stimulus adequate to the economy’s needs — and suddenly industry was eager to employ those “unadaptable and untrained” workers.The problem here isn't the logic. It's the way the closed loop of reasoning includes only the premises that point in the desired direction.
I'm not arguing that employment is important. It's critically important for the well-being and coherence of our societies.
I'm not arguing against the stimulus spending either. Without it, the situation would have been catastrophic.
What I'm trying to say is that Paul Krugman is talking completely beside the point when he's trying to teach Republicans about stimulus spending. They know all about it. They just don't want the money to go through the Federal Government. They want the stimulus to come in the form of tax reductions, and not on the Democrats' watch.
The reason we are in a ditch right now, is that the Republicans put the economy on an artificial and completely unsustainable stimulus in the Bush years. This created the structural problems that Krugman was wise enough to write about in his follow-up notes: Too many jobs in sectors where they don't produce enough long-term benefit.
The last thing we need now is more of the same kind of stimulus. We don't need more oversize houses, particularly not in Floria. We don't need more financial wizardry. We don't need more luxury products. There are a lot of builders, electricians, real estate agents and bankers who need to get retrained and put to useful work, like digging up potatoes or building factories that produce things that people need, like cheap, reliable energy that doesn't subsidize terrorist-sponsoring regimes.
One of today's problems is that we've started to confuse "speculation" and "investment" with each other. We've actually come to the point where people no longer see "speculation" as parasitical behaviour, and where "investment" has become synonymous with buying something in the hope that someone will pay more for it tomorrow. No wonder why people have stopped "investing": We already have massive deflation in certain sectors of the economy. That means that other people are likely to pay less for your assets tomorrow, not more. And who cares about investments in the old-fashioned sense of the word any more?
We all need to care.
