Money Mayhem

Paul Krugman thinks he has one solution for the economic crisis.

If you are not aware of Krugman, he is a New York Times columnist and Nobel Prize winner. He is known for his work in trade theory, and has an odd obsession with Japan. He's loved by nearly everyone, and even has a song written just for him.



I've never been a fan of Krugman. I consider it a disgrace for him to win the same award that was given to such economists as Friedrich von Hayek and Miltion Friedman.

Someone who commits the broken window fallacy in every column should not be in the same league with these economists. Also, his political beliefs have always held priority over his economic beliefs.

In a recent New York Times column, Krugman supported government regulation on emissions in order to increase investment in alternative energy. With regard to cap-and-trade policy, Krugman states "And committing ourselves to such a policy might actually help us in our current economic predicament."
He then goes on to say that free marketeers should be alright with such policies.

Why? Because they believe so strongly in the magic of the market. So basically, he is saying that it might hurt the economy, but it's okay because the market can adjust.
But one has to ask: Why force the adjustment in the first place?

There is a reason that investments in alternative energy sources are low; It's too expensive. Right now, fossil fuels are worth the price. The investment in alternatives will not increase until the substitute good becomes a less appealing option. Fossil fuels are much more practical at this point in time.

Forcing us away from the practical and best economic choice will not encourage economic recovery, but rather hamper it. Climate change regulations will hurt the economy.

More money will be spent on enforcing regulations and government researchers.

Also, regulations always slow down business operations and add to the costs, resulting in higher prices for consumers.

Krugman even admits that consumers would be made poorer by these policies. "But how much poorer? Not much, say careful researchers, like those at the Environmental Protection Agency or the Emissions Prediction and Policy Analysis Group at the Massachusetts Institute of Technology."

Basically, we will be worse off, but not by much. Therefore, it will lead to recovery. Brilliant.

So why does an economist support a policy that will be economically harmful?

After examining him more closely, it's easy to see that many other beliefs take priority over his economics. He is a strong supporter of the welfare state. Economically, this is an absurd position to take, but he holds this position because of his moral beliefs.

I believe this applies here as well. He is much more concerned with fighting global warming than fighting a depression.

Perhaps he should change professions.

By Matt Hickok