Paul Krugman, who has descended to the use of survey statistics, declares that small businesses aren’t hiring because their sales are down (“It’s Demand, Stupid“). Krugman has two points to make:
- Small businesses aren’t cowed by regime uncertainty, taxes, and red tape, and all of those other “wonderful” things about which Krugman knows nothing.
- The way to get out of the recession is to double down on “stimulus.”
Krugman’s first point aligns with his stubborn insistence — against mountains of evidence to the contrary– that government is benign and free-markets are malign.
Krugman’s second point aligns with his simplistic Keynsian view of the world, in which GDP is a homogeneous substance, like water, the level of which can be raised or lowered in a trice by government spending or the lack thereof. There’s no room in the Krugmanesque view of the world for real firms, run by real people, staffed by real people, producing myriad goods and services in myriad ways, and subject to the whims of Washington and thousands of State and local governments.
To say that small-businesspersons are reluctant to hire because there is inadequate demand for their products is like saying that a sick person is lying down because he doesn’t feel well. It’s a banal and incomplete interpretation of the situation. In any event, the fact that small businesses — and businesses in general — haven’t resumed hiring at the pre-recession rate is not an argument for mindless pump-priming. If it is an argument for anything, it is an argument for government to get out of the way.
Were the government a business, with a strong incentive to perform services of value to willing buyers, it would get out of the business of managing the economy and stick to what it does best: dispense justice and defend the nation. That it often fails to do those things well should be a clue to the Krugmans of the world about their risible faith in the wise, omniscient, and efficient government of their imagining.
There’s plenty more out there to indict and convict Krugman and his insistently wrong-headed view of the world. Here’s a minute sample:
Krugman and DeLong, a Prevaricating Pair
Professor Krugman Flunks Economics
The Negative Consequences of Government Expenditure
Regime Uncertainty: Behind the Reports of Economic Doom
Finally, Some Evidence from Krugman
In Pursuit of Empirical Macroeconomics
Krugman: Republicans Are Fiscally Irresponsible for Pushing Smaller Tax Cut, Threatening Much Larger One
To write about Krugman is to grant him the favor of being taken seriously. Basta!