Streetwise Professor

May 10, 2010

The Tinkerbell Theory of Government, Courtesy of Paul Krugman

Filed under: Economics,Politics — The Professor @ 10:05 pm

Paul Krugman recounts a litany of government failures, which he blames on . . . wait for it . . .

And the common theme in all these stories is the degradation of effective government by antigovernment ideology.

. . . .

Yet antigovernment ideology remains all too prevalent, despite the havoc it has wrought. In fact, it has been making a comeback with the rise of the Tea Party movement. If there’s any silver lining to the disaster in the gulf, it is that it may serve as a wake-up call, a reminder that we need politicians who believe in good government, because there are some jobs only the government can do.

Uhm, Paul, the connection between purported cause and effect seems a little murky.  Indeed, mightn’t the causation run in the other direction?  Ya think that people’s disenchantment with government might be, you know, empirically based?  Rooted in experience?  In direct observation?

But no, Peter Pan Krugman Knows.  Tinker Bell Government is dying because not enough people believe in her!  So believe, everyone!  Repeat after Peter Pan Paul!  I do believe!  I do believe in government! I do! I do!  Obama believes!  Do you?  Oh, I do believe in government!  I do believe!

Actually, it is beyond belief that any adult would believe that if we only had “politicians who believe in good government” that we will get good government.

Like Peter Pan, some people never grow up.  Rather than doing a bad imitation of Mary Martin, Paul Krugman would be better to consider these words: “When I was a child, I spake as a child, I understood as a child, I thought as a child: but when I became a man, I put away childish things.”  And there are few things more childish than blaming government failures on the ill will of “ideologues,” virtually none of whom are actually in government, and whose very ideology would indeed make them highly averse to being so.  In other words, read public choice, not Peter Pan.

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  1. It’s interesting to see how themes and messages repeat themselves. Krugman’s gripe reminds me of the old Soviet accusations of “sabotage” and “wrecking.” If only people would stop ruining this wonderful system, everything would work perfectly.

    Comment by Howard Roark — May 11, 2010 @ 12:09 am

  2. The socialist democratic model of government so revered by Western Europeans (and teh Obama administration) is broken and disintegrating with Greece, Spain, Portugal, the U.K. and various other countries running out of other peoples’ money to support the welfare state, yet Krugman (allegedly an economist) remains silent. Why am I not surprised?

    Comment by Charles — May 11, 2010 @ 8:24 am

  3. @Charles–it’s even worse than that. Krugman routinely argues for much higher deficits, much greater debt. He rages against those who argue that it is necessary to get government spending under control. He is of the “in the long run we’re all dead” school, and for him, the long run begins in about, oh, six months.

    The ProfessorComment by The Professor — May 11, 2010 @ 9:34 am

  4. Professor, One would reasonably expect that a Nobel Prize winning economist would, in the name of intellectual honesty, address the fact that the exact model he espouses has failed miserably in Western Europe and the damage from executing such a model will take generations to repair. Personally, I believe Krugman is most useful for the comedy factor, not for any intellectual edification.

    Comment by Charles — May 11, 2010 @ 10:59 am

  5. SWP,

    In respect to Krugman, you are only bayoneting your own strawman. In respect to the Gulf, the problem was in government yielding to sleazy corporate lobbying for “self-regulation” (i.e., minimal regulation and expenditures on safety measures) under the banner of starving the beast. The result? BP pockets astronomical profits, in part thanks to federal tax subsidies, while spending a pittance on the containment of the oil spill / cleanup and more importantly burnishing its PR, and all the time whining about being victimized into the bargain (“what have we done to deserve this?”).

    PS. Makes me all the gladder that Russia put the screw on those corporate bandits.

    Comment by Sublime Oblivion — May 11, 2010 @ 5:10 pm

  6. @Charles,

    That is a gross simplification. There are vast differences between the Nordic social welfare model, the continental (French/German one), the UK, and the Mediterranean model. Of those, the first two are going strong – arguably, stronger than the American model. Only the latter has latently failed, and it was never regarded as ideal by anyone.

    Comment by Sublime Oblivion — May 11, 2010 @ 5:14 pm

  7. S/O–

    1. Bayoneting Krugman (metaphorically) is one of life’s little pleasures. When he presents such a big, juicy target, it is impossible to resist.
    2. Although the specific thing Krugman talked about was the oil spill, it is clear that he was advancing a General Theory of Government Failure. Hence the broad attack was fully warranted.
    3. Re the oil spill in particular, IMO for cases like this ex post deterrence through the imposition of damages is a much more effective way to regulate than ex ante prescriptive regulation. That regulation is usually predicated on far poorer information in the hands of the regulator than the regulated, very low power incentives, and is as you point out subject to capture. Not that the idea is yours. Stigler pointed it out years ago, in his much more plausible (than Krugman’s) theory of government failure. Some arguments in favor of regulation (such as those advanced by Shleifer) are driven by the view that courts are more subject to suborning and influence by wealthy parties than regulators. I don’t think that’s a particularly defensible position, at least nowadays in the US. In the Progressive Era, perhaps. (In Russia–the answer is “both are so you’re screwed either way.”)
    4. I see, you think it’s a great deal if those in power in the Russian government line their pockets by shaking down (“screwing”) corporate bandits. Why do you reckon one set of bandits is more morally elevated than another? I would argue that with respect to the bandits in the Russian government, they are bandits who provide no valuable service with probability 1: their gain is pure theft. With respect to corporate bandits, some may actually do something that creates gains from trade some of the time. So some of their gain is theft, and some the result of creating wealth and value. Expropriating those bandits to benefit the government bandits is therefore wealth destroying. And, if Russia had a more reliable court system that could effectively discipline corporate bandits, there would be no need to have the government bandits involved at all.

    The ProfessorComment by The Professor — May 11, 2010 @ 6:23 pm

  8. The hindsighters always display themselves after a disaster. Simply put, you can’t regulate away all risk, it’s impossible. There are too many variables. And believe it or not, oil companies know the risks more than regulators, though Krugman and his disciples could never understand that.

    As for Russia cracking down on corporate bandits, supposedly unlike the U.S., thank you for such grossly ridiculous humor. I’ll be laughing about that one for months.

    And by the way, if people want BP to pay for all the damages (which is fine with me), how would they do that if they didn’t have profits? As stated above, all risks cannot be removed, so which company would you rather have be liable for clean up, a rich one or a poor one? Profits are one of the biggest hedges against risk, but I suppose people didn’t learn that one in school.

    Comment by Howard Roark — May 11, 2010 @ 10:37 pm

  9. “Why do you reckon one set of bandits is more morally elevated than another?”

    Because the present set fund the healthcare system sufficient to raise life expectancy, while the set associated with the “Harvard Boys” propping up the drunken incompetent comprador buffoon Yeltsin slashed it, with the result that life expectancy collapsed.

    Comment by rkka — May 12, 2010 @ 5:17 am

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