Should There Be A Special Tax on Paul Krugman?
In his New York Times column this morning, Paul Krugman cites a new paper estimating that the failure of our economy to fully recover from the recession is costing us $1 trillion a year. Why? Because:
[O]ur seemingly endless slump has done long-term damage through multiple channels. The long-term unemployed eventually come to be seen as unemployable; business investment lags thanks to weak sales; new businesses don’t get started; and existing businesses skimp on research and development.
Hm
m. How much of this loss we can blame on Krugman himself? If we take Casey Mulligan’s estimates, half the excess unemployment is caused by expanded entitlement spending (Food stamps, unemployment compensation, disability, etc.). But who is the nation’s number one advocate for the welfare state? Hint: he writes for the NYT. The uncertainty caused by ObamaCare surely contributes to much of the remaining unemployment. But who is the nation’s most vociferous advocate of ObamaCare? Okay, probably the president. But surely Paul is in second place. And who is the most persistent advocate of other kinds of other regulations that create business uncertainty and impair hiring? It’s hard to give the prize to anyone but Paul.
I can attest from personal conversations that Krugman editorials influence people at Brookings and on Capitol Hill. So I think assigning as little as 1 to 2% of the trillion dollar annual loss to Krugman would actually be a very conservative estimate. The true damage is probably many times that. Anyway, the upshot is that Krugman’s editorials are causing harm to innocent victims.
Economics teaches that one remedy for negative externalities is taxation. However, I’m afraid that the correct Pigouvian tax would wipe Krugman out. It would send him to the welfare office. He would be waiting in line for his next allotment of Food Stamps.
I’m just trying to imagine what that would look like.
Another problem is the longer people are out of the workforce, the more their skillset deteriorates. Unemployed workers who have been out of the workforce for two years are at substantial risk of becoming unemployable. Relaxed disability insurance qualifications also guarantees that a substantial proportion of unemployed workers will never reenter the workforce.
I rarely am one to support more government involvement, but a more substantial monitoring process needs to be formed for these welfare programs. The rate of those who abuse the system is surely shocking.
What were the motives behind relaxing the DI qualifications? Isn’t our economy in need of a “boost”?
I don’t see the logic behind creating an incentive for people to sit on the couch at home, rather than looking high and low for an employment opportunity.
A solution:
Take the payroll tax that employers pay for social security and pump it into investment funds (similar to the Chilean Pension system.) This keeps that money flowing through the economy rather than in the Ponzi-Scheme that Washington is running.
Taxation hinders businesses and businesses create jobs.
What does Krugman not understand about this?
He’s an ivy league economist, they think that they know better than everybody else.
Furthermore, it stifles innovation. Instead of “R&Ding” the next best thing, companies are trudging through mountains of red tape.
Imagine what the economy would look like today is Romney was elected and he was successful at implementing a zero-capital gains tax…
I know many investors who are sitting on “boat loads” of cash because of the market uncertainty – look at the latest numbers of VIX index – with Obama in office.
After a bust, there is a boom. I strongly believe that if the next administration is business friendly, America will see a market boom that will rival the roaring twenties.
Until then, let’s hope the current administration doesn’t tax us all into bankruptcy.
Unfortunately, the economy has not recovered from the last bust and all the factors that caused the bust have been doubled down on. I fear we will see an even greater bust before we see another period of plenty.
I’d propose that the correct Pigouvian tax on Krugman should be a rate per word written or spoken (similar to proposed carbon taxes). The mind boggles at what the appropriate rate should be…
Incentives matter. The more readership Krugman has, the greater is his job security and pay. The NYT is a liberal editorial paper. The more liberal, the more outlandish, the more unique among economists Krugman’s economic point of view is, the greater his readership is at the NYT. He is not paid for being right or a mainstream economist. At the NYT, he is a reality TV star equivalent; outlandish, dramatic, conflict motivated, self-centered, pandering to his readers to increase his audience numbers.
L like the idea of Krugman standing in the bread line. There is something poetic about the image.