Krugman's Tin Ear
By David Henderson
I could just as easily have titled this post “Krugman’s Achilles Heal.” Basically, it’s that Paul Krugman seems never to take account of the findings of public choice. Even a basic understanding of public choice would make him question his views about how effective government can be in achieving good things.
This comes across clearly to those who, as I do, read over 30 percent of his columns in the New York Times. He seems to believe that if one can conceive of a government solution to a problem, then all that has to happen is that the legislative bodies pass a law to spend money on the problem and the problem will be fixed. He made this point explicit in a December 19 talk at the National Press Club. At just after the 5-minute point, Krugman gives an example of what he calls an “easy problem.” Repairing highways, he says, in an easy problem. It might be politically difficult to get the votes, he says, but once you’ve got the votes, you pass the legislation and the highways are repaired.
In fact, repairing highways, if the government runs them, is a tough problem. Consider this paragraph from Brookings Institution economist Clifford Winston in his December 28 op/ed in the Wall Street Journal, “‘Stimulus’ Doesn’t Have to Mean Pork:’
One of the biggest killers of all is that states insist on allocating federal transportation funds through a politically devised formula. The result? Smooth, well-paved rural highways and worn-out urban roadways that are paved with a layer of asphalt too thin to withstand heavy use and are therefore in need of excessive, costly maintenance.
In other words, it’s not simply a matter of getting votes: it’s also that the way you can get the votes undercuts the achievement of results. It would be a straightforward problem if the roads were privately owned by for-profit firms. But when it comes to government, almost nothing is “easy” except the conclusion that governments will always grasp for more power.