Luskin (as usual) debunks Krugman

From: Bill Dozier <wddozier@mac.com>
Date: Thu Aug 11 2005 - 22:51:16 EDT

Really, I have no idea why anyone takes Krugman seriously about
anything. His track record is not impressive.

Here's an article by Don Luskin from NRO (http://
www.nationalreview.com/script/printpage.p?ref=/nrof_luskin/
luskin200508100852.asp) yesterday. There are lots of links in the
article, but I pasted it into mail as plain text. Go to the link to
get the "footnotes."

Bill Dozier
Minister of Silly Guitar Sounds
------
"The Franco-American alliance is quite robust and likely to last a
long time. The French have always been there when they needed us." --
The Belmont Club

August 10, 2005, 8:52 a.m.
Unintelligent Design by Don Lusking

The origins and madness of Paul Krugman’s economic doctrine of
massive taxation.

One of the Left’s sleaziest rhetorical tricks is to discredit
conservative ideals by claiming they are based on religious beliefs,
while liberal ideals are based on science. The Right, they sneer, is
“faith based.” The Left, they brag, is “reality based.”

So we have Paul Krugman, America’s most dangerous liberal pundit,
claiming that the world of conservative thought is “increasingly
dominated by people who believe truth should be determined by
revelation, not research.” Krugman even thinks the conservative
preference for lower tax rates and higher economic growth is nothing
more than a matter of right-wing religious zealotry. In his Friday
New York Times column, Krugman called supply-side economics a
“doctrine” that believes in “miraculous positive effects” which has
“never been backed by evidence.”

Of course Krugman believes that his own leftist “doctrines” are
entirely scientific. He excoriates Tom DeLay and Rick Santorum for
statements they have made about the religious foundations of their
views. But he never objects to the same kind of foundations when they
support the views of Martin Luther King, Jr., Jesse Jackson, or even
Al Sharpton.

In fact, Krugman doesn’t seem to know that the modern liberal
conception of the welfare state began as a great religious awakening,
led by the Christian Socialist and Social Gospel movements of the
late 19th century. Their central doctrine was that the power of the
state should be harnessed to redistribute wealth in order to combat
sin among America’s crowded new urban populations. This doctrine
gradually prevailed throughout the 20th century, through the
Progressive Era, the New Deal, and the Great Society, with the
introduction of the federal income tax, Social Security, Medicare,
and the regulatory state.

Today’s seemingly secular science of economics — an establishment in
which Paul Krugman is regarded as a leading authority — was
deliberately created in the late 19th century to manufacture an
intellectual imprimatur for the Christian Socialist and Social Gospel
movements. It came about in just the way Krugman, in his Friday
column, claims today’s conservative think tanks were created by the
Right to manufacture evidence against liberal shibboleths such as
global warming.

The American Economic Association — the leading professional
organization of economics — was founded in 1885 to be, in the words
of its leading founder Richard T. Ely, “an influential movement which
will help in the diffusion of a sound, Christian political economy.”
Its first mission statement called for combating “social problems
whose solution is impossible without the united efforts of Church,
State, and Science.”

Science? Au contraire. Of the AEA’s 50 founding members, more than 20
were former or practicing clergymen. And while Krugman warns today
that the religious Right has begun a “process that ends with
banishing Darwin from the classroom,” the AEA was founded explicitly
to banish Darwinistic science from economics, for fear that it was
buttressing the then-dominant paradigm of laissez-faire capitalism.
No matter that Darwinism was good science. As historian Benjamin G.
Rader put it in a biography of Ely, “Christian moral responsibility
should be emphasized rather than the search for mechanistic laws.”

The banishment of Darwin — and science — from economics continues
today in the work of statists like Krugman, and the AEA continues to
put its imprimatur on their work. Every two years the AEA awards the
John Bates Clark medal to the most distinguished American economist
under the age of 40. Paul Krugman won it in 1991. Clark, an AEA
founder, was a Christian Socialist. Though famous as the great
pioneer of the theory of “perfect competition,” Clark actually
believed that “Individual competition ... ought to disappear ... The
alternative regulator is moral force.”

It must be moral force — it certainly isn’t science — that permits
Krugman to claim that supply-side economics has “never been backed by
evidence.” How does he reconcile the fact that federal tax revenues
plummeted after peaking in 2000 (while tax rates remained high) and
then recovered after the 2003 tax cuts were put in place? What does
he call Krugman Truth Squad member Kevin Hassett’s observation that
the tax revenues currently anticipated by the Congressional Budget
Office for 2006 are about the same as those it anticipated for 2006
back in 1999 — even though tax rates have been slashed since then?

Here’s what I call it: scientific, empirical, real-world proof.
Supply-side economics works. Lower tax rates, higher economic growth,
and higher tax revenues go hand in hand in hand.

But despite the evidence, what economic “doctrine” would Paul Krugman
prefer? He wants to see tax hikes — big tax hikes. He recently said,
“We should be getting 28% of GDP [gross domestic product] in revenue.
We are only collecting 17%.” It doesn’t take much of a scientist to
realize that he’s talking about increasing federal taxes of all types
by about 65 percent on average. But if Krugman were more of a
scientist — if he’d look at the evidence — he’d realize that it can’t
be done.

Historically, federal taxes have never even taken as much as 21
percent of GDP — even though federal income tax rates have at one
time topped 90 percent (from 1944 to 1953). So what tax rate would
Krugman propose in order to collect 28 percent of GDP in revenues
when even 90 percent rates won’t get revenues up to even 21 percent
of GDP? Krugman Truth Squad member William Anderson reported on the
VonMises Blog that Krugman himself once said that 70 percent income-
tax rates are “insane.” So if rates even worse than insane won’t do
it, what will?

Sheer faith, apparently.
Received on Thu Aug 11 22:53:21 2005

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