The American Spectator : A Tsunami of Bad Economics

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A Tsunami of Bad Economics

By Ryan Young on 5.23.12 @ 6:07AM

The broken Krugman fallacy.

Japan was hit by a tsunami last year on March 11. That’s not news, but the reaction of some economists sure is. Just imagine looking up at a hundred-foot tall column of water rushing towards you at highway speed. This was the last thing some people ever saw. According to official estimates, that wave killed more than 15,000 people and injured nearly 27,000 more. What’s the upside to this natural disaster? I’ll be blunt. There isn’t one. But some economists think there is.

To come to such an inhumane conclusion is to forget the economic discipline’s most fundamental lessons. Now that a year has passed and rebuilding is well underway, economic data is starting to come in that quantifies the tsunami’s impact. As it turns out, Japan’s GDP is growing twice as fast as America’s. Paul Krugman, in a recent post in his New York Times blog, argues that the tsunami played a starring role. He writes:

So Japan, which is spending heavily for post-tsunami reconstruction, is growing quite fast, while Italy, which is imposing austerity measures, is shrinking almost equally fast.

There seems to be some kind of lesson here about macroeconomics, but I can’t quite put my finger on it…

Imagine for a minute that the tsunami never happened. Japan’s GDP growth would probably be slower; Krugman is almost certainly correct on that. And yet, a tsunami-less Japan would be better off. For one, the survivors wouldn’t have 15,000 holes in their hearts where their families, friends, and neighbors used to be.

As far as the economy goes, all that reconstruction spending would instead go to creating brand new wealth, as opposed to merely replacing what people already had to begin with. It is better to build than to rebuild.

Krugman, just as he did after 9/11, has fallen for the broken window fallacy. If a kid breaks a window, that creates a job for the repairman and boosts the economy. The lesson: break every window in the world, and we’ll all be rich. That tsunami broke a lot of windows, and according to Krugman, Japan is reaping the benefits. Maybe we should hope for another one.

If there is indeed a macroeconomic lesson here, it is to not rely so heavily as Krugman does on GDP to measure how well an economy is doing. GDP certainly has its uses. But over-reliance on that single statistic can lead to ghastly conclusions such as the one Krugman hints at: pray for more tsunamis. Or, failing that, alien invasions (I’m serious).

The trouble with such thinking, besides its basic inhumanity, is that Japan’s GDP surge isn’t evidence that its people are richer because they endured a tsunami.

To understand why, you need to know the difference between a stock and a flow. Things such as buildings and roads are stocks of wealth. GDP doesn’t measure that. It only measures the flow of wealth. Buildings and roads only add to GDP in the year in which they are built. But they remain tangible stocks of wealth for as long as they exist.

Despite Fannie Mae’s best efforts, your home is worth more than zero — even if it’s more than a year old. GDP doesn’t capture that. And when that tsunami practically washed away entire towns, Japan’s GDP didn’t go down by a single yen. Clearly this is not a good yardstick for measuring the tsunami’s economic impact.

GDP measures how fast wealth is being created, and the faster the better. But the speed of that flow doesn’t measure how much wealth actually exists at a given time. Nor does it distinguish between replacing something that was there before, versus creating something new.

The tsunami destroyed a good chunk of Japan’s stock of wealth. The rush to restore it has quickened the flow of GDP, which is the cause for Krugman’s ghoulish celebration. But Japan is still poorer than it would be if the tsunami never happened.

Natural disasters are called disasters for two reasons. One is that they kill people. The other is that they destroy wealth, even if post-disaster GDP makes it look like they create it.

About the Author

Ryan Young is Fellow in Regulatory Studies at the Competitive Enterprise Institute.

Letter to the Editor View all comments (75) | Leave a comment Leave a comment

Appleby| 5.23.12 @ 6:54AM

I suppose there are plenty of Greenies who think that the tsunami was Mother Earth clearing off some of the human beings that infest her, and they'd be glad if another billion or so of us died (as long as they personally were safe in a McMansion inland) in some kind of natural disaster. The bad news for the Greenies is all the stuff that washed off Japan in the tsunami is now washing up on the shores of North America, not to mention bobbing along in the ocean on its way here. I'm surprised we haven't heard anything about this, or had any proposals for gigantic boondoggle plans to clean it up.

TLP| 5.23.12 @ 3:00PM

Let me see if I've got this right.

The ALWAYS WRONG Paul Krugman, is WRONG, again?

His picture is in the Dictionary next to the Definition of Insanity.

When George W. Bush was running $200 Billion deficits, Ferret Face was beside himself. When The Muslim pissed away $800 Billion, on a Slush Fund for his Public Sector Union Thug Buddies, and was running up $6,000,000,000,000 in Debt, our Nobel Prize winning Hero, was saying that: "We need to spend more!"

Like his fellow Never did a hard days work in his life, buddies: Thomas Friedman, Chris Mathews, Le Cage Boy - Frank Rich - that Bull Dyke at MSNBC, and Gloria Vanderbilt's Tea Bagging little boy, at CNN - Anderson Cooper - he knows about as much about how ECONOMICS works, as the Son of an Atheist/Communist Whore, and a Muslim/Marxist Drunk, who died in a Kenyan Gutter, knows how many States there are in the Union.

Liberalism is a Mental Disorder that believes that, no matter how many times SOCIALISM FAILS?

THIS TIME it's gonna work.

GOD help us.

Petronius| 5.23.12 @ 3:48PM

Wrong TLP
It's a few pages before the word Insanity. It's next to the word Infantile.
The appeal of socialistic equality is grounded in childish sentiment too many people refuse to outgrow, and the belief that their expectations won't be met regardless of effort. Pouting and hissyfits are so much easier.

Von Mises Jr| 5.23.12 @ 7:20AM

The socialist and elitist Krugman conveniently forgets Bastiat and "That Which is Seen and That Which is Not Seen." (Published in 1850)
The "Broken Window Fallacy" is a good example of this broader concept. Politicians and socialist such as Krugman always sell the positive "Seen" but hide the negative "Unseen." If you simply look for the unseen consequences in any politicians blather, you will find out that they are lying most of the time.
Either lying or extremely ignorant and dull.

Indy| 5.23.12 @ 7:49AM

I recall seeing a video on this topic

http://www.learnliberty.org/co.....ow-fallacy

There are many good videos at learn liberty on mulitple topics. They can be used to illustrate points, I have shared this link with teachers and they have found them useful. Not everyone is as well read as you are and too many turn away from learning about economics because they find it boring. I'm glad to see the time and effort put into videos, it may be a way to reach our youth and maybe, just maybe some of them will read Bastiat, Sowell, Hayek and others.

Richard Ryan| 5.23.12 @ 8:04AM

Great link-thanks

Von Mises Jr| 5.23.12 @ 8:45AM

Awesome Indy. Anyone who thinks economics is boring should watch this video. We have been told it is confusing and boring so that elitest can scam us. This is an informative and short clip. Please watch.

skip| 5.23.12 @ 10:18AM

This article reminded me of this all-time, hall of fame, classic video:

http://www.powerlineblog.com/a.....028923.php

W| 5.23.12 @ 1:02PM

You may want to add "The Ethics of Redistribution" by Jouvenal to the list. If you want to reidstribute wealth, then you need someone to decide how much to redistribute and to whom. This inevitably leads to a concentration of power to make and enforce these decisions reulting in totalitarian regimes.

Von Mises Jr| 5.23.12 @ 2:33PM

One of the main threads of "Road to Serfdom" is that central planners must pick winners and losers since the market no longer functions.

Obama and the Democrats have proven that Romney must have great talent. He certainly didn't have a portfolio of "Green" Energy scams and GM down $80B with no propect of paying it back. AIG got over $200B, and Fannie and Freddie that Barney fixed ask for $40B every time they are mentioned in the news.

skip| 5.23.12 @ 2:44PM

I'd know all that, Von, but I'm still waiting for my copies of the book and the news to arrive via United States Postal Service, the one big government program democrats like to use as their example of a big government success story. After all, the USPS is only losing $3 billion or so per quarter.

Petronius| 5.23.12 @ 4:00PM

I could take the rest of the day explaining how and why the Postal Service is being sabotaged. Sorry you don't have your books yet, but no new Letter Carriers are being hired to replace the recently retired going on 6 years now. Our SCF has almost 200 open full time no-bid routes without a regular Carrier. Do yourself a favor and talk to the person delivering your mail and find out what goes on that the public never sees and doesn't know. We aren't losing on a regular basis from operations, but due to the benefit pre-funding requirements to the OPM. Congress won't fix this because they couldn't leverage other spending against that money if they did. Pass H.R. 1351. Then we could pay off that debt.

skip| 5.23.12 @ 5:45PM

"Postal Service management...concluded negotiations...four-and-a-half year contract that will provide a 3.5% pay raise over three years, dole out automatic cost of living hikes after 2012, and expand no-layoff protections" - WSJ

"But given that 80% of postal costs are for wages and benefits, this contract is unhinged from all fiscal reality" - WSJ

"Even worse is a bill...to toss a $50 to $75 billion life raft to USPS by having the feds underwrite pension obligations" - WSJ

"We hope the tea party folks are paying attention because this bailout would cost about three times the first-year savings from the...2011 federal budget deal" - WSJ

"This giveaway would be especially infuriating because postal workers already enjoy a 30% to 40% edge in pay and benefits over comparably skilled private workers, according to the Postal Service's own economic analysis. Bureau of Labor Statistics data indicate the average hourly compensation for postal union members is $41 versus $28 for private industry. Postal workers also contribute far less than private workers and even less than other federal workers to cover health-care costs." - WSJ

"All employees receive generous benefits including: 10 paid holidays, 13 days of vacation for the first three years, twenty days of vacation with three to fifteen years service and after fifteen years twenty-six days. Additionally, 13 sick days are accrued each year regardless of length of service." - postal website

Indy| 5.23.12 @ 7:32PM

Depressing when so many of us worked to send 87 freshman to Congress and this is what we get?

Privatize, shut down Saturday service, stop the accrual of sick days that does not happen in the private sector it should not in the public sector. The is more that can be done, the 80% in labor cost is absurd.

buoyant| 5.24.12 @ 1:15PM

What do you think money SHOULD be spent on in an organization which is labor intensive, which requires humans to deliver mail daily to almost every house across America?

skip| 5.24.12 @ 10:12PM

49 paid days off, unfunded pension obligations, pay 40% more than those forking out the money for the wages and bennies, forking out less for their bennies than those forking out more for their bennies and forking out the money for the wages and the bennies, guaranteed pay increases regardless of performance, guaranteed cost of living increases regardless of performance, guaranteed no layoffs regardless of performance, all with known losses exceeding $1 billion each month, all negotiated with the money of those not actually sitting at the negotiating table, 4 of every 5 dollars for the wages and bennies that don't begin to cover the pensions or the more than a billion in losses each and every month, you jackass?

russell| 5.27.12 @ 8:53AM

blah, blah, blah.

i love the postal defenders. they almost always are the beneficiaries of the bloat.

as always though, the citizens, especially in 2012, could completely do without the agency in question.

in the past month 97% (by # of pieces, probably much higher if by weight) of what my carrier has put in my mailbox is trash...advertising that i didn't ask for and don't want. think about that next time you cry the blues about both the status and the financial condition of the usps.

if the usps disappeared tomorrow my life and the financial condition of the nation would both improve.

W| 5.23.12 @ 3:08PM

Lefties like Obama crave and love the power to pick and choose winners, and dole out money. It is their religion.

Von Mises Jr| 5.23.12 @ 4:22PM

George Kaiser from Solyndra is proof positive. Bundle and donate to ObaMao and you might, I mean you WILL, get lucky (with taxpayers money).

BTW, W. I just heard on Rush that the 43 Archdioceses suing over religious freedom got 19 seconds on one of the tree major TV networks and buried on back pages of liberal newspapers. Is it no wonder that liberals are so stupid? They don't even know what is going on. Rush compared it to Chinese Communist withholding news of Americans landing on the moon for twenty years since it made China look backward.

W| 5.23.12 @ 5:15PM

Lefties are in shock that conservatives and religious groups, especially the Catholic Church, is using the court system to challenge the laws. It was always the ACLU, Planned Parenthood, and the like using the courts. Now we know how to do it, and they do not know how to deal with it. Obama probably believed that with Sebellius at HHS the Catholic organizations would not sue.

Von Mises Jr| 5.23.12 @ 11:34PM

They also can't figure out that the TEA Party is now more effective than their lefty groups working the political system. We just expunged Lugar after disgorging Bennett last cycle. And the Dems took over 700 losses in 2010. I can hardly wait for November. Now I know how Chris Matthews felt when he got chills down his leg. I still can't figure out how Brooks felt as he stared at the One's pant crease?

Robert| 5.24.12 @ 2:25AM

You are right! The thrust of Krugman's comments are to throw money at the problem (spent by our betters in their elitist ivory towers). He will eventually call for QE3.

JimH| 5.23.12 @ 8:17AM

Ah Ludwig, you are indeed a scholar. I was reading the article and the broken window example came to mind, but I could not recall the author. As I get older these memory lapses seem to increase. I wonder, is there any sort of economic statistic which shows what a net GDP would be? By this I mean something which measures the net gain of what is produced after accounting for the value of what has been replaced.

Von Mises Jr| 5.23.12 @ 8:53AM

It is probably a waste of time trying to inventory American or global wealth more than a simple statistical guess, or what might be called a WAG. But it is important to understand this concept for each and every marginal decision or proposal made by a politician.
This is where the foolish multiplier effect came from. Liberals (read socialist) could not effectively argue that in order for government to spend money, it must first seize that money from the private sector. So Keynes (right Perp?) and others said that government spending was more efficient than private spending.
But we know that as much as one-third of Medicaid spending is wasted or stolen. Doctors refuse Medicaid since they get some $13 per hundred after the reduced reimbursement less costs. So poor people do not get much care, while bureaucrats have fat salaries, pensions and benefits and crooks file fake Medicaid claims. If this is more efficient than the free market of people spending their own money for medical care, I am a Kumquat.

DRed| 5.23.12 @ 10:08AM

I'm not sure who thinks government spending is more efficient than private spending. Anyhow, that's not what Krugman is saying. What he's arguing is that the Japanese government's spending has lead to an increase in money that is going to consumption-he believes that in Japan too much money was being saved.

Von Mises Jr| 5.23.12 @ 10:27AM

Another moronic analysis. Pelosi said unemployment creates a multiplier effect, genius.

In a capitalist free market system, money is saved by some for future use and lent to others that use it to create wealth. It is called capital formation, Einstein. That is what produces interest income and dividends.
It is only when government usurps wealth from the private sector and wastes/steals most of it that society suffers.
You and Perp should read Sowell's "Basic Economics." That is if Perp, Brooksie, Twitvin and you are not simply one troll with multiple login on your computer. I would hate to think that there are that many functionally illiterate in economics that you are several instead of singular?

DRed| 5.23.12 @ 10:49AM

Saying that unemployment benefits have a multiplier effect is not saying that government spending is more efficient than private spending.

Von Mises Jr| 5.23.12 @ 12:11PM

If the money comes from the private sector to be used for public projects, you are either better off or worse off from the redistribution. So are you saying that you concede that government spending is wasteful by comparison?
The multiplier effect is based on investment. But government invests poorly at best, and mostly engages in wasteful spending. So what is your point?

DRed| 5.23.12 @ 12:23PM

The government doesn't invest money when it pays an unemployment benefit. People who are unemployed make their own choices on what to spend their money on. The theory is that this money will be spent in the short term by the beneficiaries (because they're broke) and will stimulate aggregate demand (which has fallen due to unemployment).

Moving to Basquiat's broken window fallacy, Krugman is certainly aware of it. He's written about why he doesn't think it applies now. I can find you some of his columns discussing it if you'd like.

D is for Dumbass . . .| 5.23.12 @ 12:59PM

. . . R is for Retarded

John786| 5.23.12 @ 1:23PM

The people on the right don't have the brain cells to assimilate what Krugman is getting at. A clue: he's not advocating any disaster: dumbasses.

baal| 5.23.12 @ 2:20PM

Nice typo. Are you actually John785 or John787?

"[Obama's] learned a lot. And, you know, his heart's always been in the right place, and I believe his head is now in the right place. And you certainly -- of course, I can't do endorsements, right? It's a Times' rule. So you have no idea who I prefer in this election. But he certainly is talking sense about the economy, and Mitt Romney is talking utter nonsense. ... [T]he Republican platform is, let's put that doctrine that has just caused collapse in Europe -- let's put that doctrine into effect right here in America."
- Paul Krugman

W| 5.23.12 @ 3:09PM

Why don't you spell it out in simple language for us to understand, John?

Ground Control| 5.23.12 @ 4:21PM

No one said he was, boob. Krugman IS advocating government spending even (especially!) when in response to a natural disaster and pretending that this is "investment." Krugman is one of those dolts (like you) who think government spending multiplies wealth. It does not.

Von Mises Jr| 5.23.12 @ 2:28PM

Basquiat? Now it makes sense that you read Krugman.

DRed| 5.23.12 @ 2:52PM

ha. Spelling was never my thing. Some say Basquiat, some say simma cum laude. Anyhow, why don't you read some of what Krugman has to say about why the broken window fallacy doesn't apply in when an economy is in a liquidity trap and tell me what you think?

Von Mises Jr| 5.23.12 @ 3:15PM

DRedful, "i" is next to "u" on the keyboard and an honest misspell for summa.
"t" and "q" are handful of spaces away, so either you do not know who Claude Frederic was or you have such bad aim that your fingers miss by four inches. But somehow you seemed to find the "u" even there is no "u" in his name. Are you high on drugs or just drunk in the afternoon?

But since you know so much about Bastiat, other than the "Broken Window Fallacy," what were his other two famous writings?
If you don't know, you can always call Perp?

DRed| 5.23.12 @ 3:27PM

I don't know much about Bastiat at all. When did I claim I did? I was trying to talk about Krugman's argument about Japan.

Von Mises Jr| 5.23.12 @ 4:16PM

You said the "Broken Window Fallacy" no longer applies. Are you just a parrot for Krugman or do you think for yourself?
You sound sort of like the socialist school of Historicism. You know what that is right?
Didn't think so. They said economics was geographical and temporal (you know what that means)?
If you understood what I was talking about, I would charge you tuition.

DRed| 5.23.12 @ 4:40PM

No, my friend, I did not say that. In your first post you triumphantly claim that Krugman had forgotten Bastiat. You're wrong. He's addressed the broken window fallacy. I asked what you thought of his arguments. As usual, you haven't answered.

I'm not sure how saying I'm not familiar with Bastiat makes me "sound sort of like the socialist school of Historicism". That seems to be to be a total non-sequitur.

Perdido| 5.26.12 @ 5:32PM

You can't. The fees his parents pay his friends leave nothing for tutoring.

Trinacria| 5.23.12 @ 7:19PM

Au contraire, Senior Rojo; that's precisely what she's saying. If she believed that private spending were more efficient/effective, she wouldn't advocate confiscating assets from the private sector to fund the "multiplier effect" of government spending.

DRed| 5.23.12 @ 8:02PM

She's talking about a specific type of government spending, during a particular timeframe. It doesn't follow that she thinks government spending is more efficient than free market capitalism because she's a communist. (although she may be-I don't really know what Nancy Pelosi is thinking)

Von Mises Jr| 5.23.12 @ 11:31PM

I am supposed to read that jackass Krugman to tell you what I think DRed? You quote Pelosi but don't know what she means? That is why you are a liberal. You want others to do your work for you.

DRed| 5.24.12 @ 12:51AM

You were the one who brought up Pelosi, my friend. I'm telling you what I think she was trying to say. I certainly never quoted her.

As for reading Krugman, I asked because I was interested in hearing what you thought of his arguments. I'm not asking you to tell me what they are. Are you familiar with the idea of epistemic closure? If you understood what I was talking about, I would charge you tuition.

Actually, strike that last remark. That makes me sound like an arrogant prick.

Perdido| 5.26.12 @ 5:38PM

Again with the bossing someone around to do your work. Strike that last remark yourself.

David Thomas | 5.23.12 @ 5:25PM

When I practicing surgery, I took out just as much of the appendix when operating on someone on Medicaid as when doing an appendectomy on a full-paying patient. :)
You might be interested in reading my thoughts on Can There Be a Right to Medical Care posted Dec. 2008 on http://davids-home-now.blogspot.com.

POST American| 5.23.12 @ 7:47AM

---AS we put aside those latest reports
from the usually reticent Japanese
press detailing the imminent threat
of the collapse of GE reactor # 4
--thereby releasing the radiaiton of
some 84 (!) Chernobyls ----ALLLLL
blowing over to Canada and the American
west coast -----

--Yes! ---now ---BACK to MORE
Paul Krugman! ---and the 'Rule by X--spurts'
generally!

----YES! ----YES!! -----BRILLIANT!!!!

-------------HUAC meets Nuremberg 2012-----------

Mike Hawk| 5.23.12 @ 8:21AM

Krugman is a Socialist and statist. He has to put a happy face on the tagedy and make it fit his philosophy, no matter how distorted. In his f/u world we need more Hurricanes, earthquakes and tornadoes to stimulate prosperity. Krugman is useless.

SC Mike| 5.23.12 @ 8:33AM

By Krugman’s logic WWII was a boon for the Germans and Japanese because they got to rebuild their bombed-out industrial base with state-of-the-art equipment while we Americans had to make do with our older plant and equipment. Thus the aftermath of losing an all-out war is good for GDP growth.

Neo| 5.23.12 @ 9:03AM

... and the US missed out because out major cities weren't bombed

PolishKnight| 5.23.12 @ 10:37AM

This analysis doesn't include debt which is what Japan probably needed for the rebuild which is another fundamental of Keynsian economics. In theory, if you simply keep using your plastic forever, you'll stimulate anything into a recovery. It's essentially a ponzi scheme.

In countries that are truly war torn and didn't have access to debt to rebuild (such as Germany post WWI), the GDP didn't soar. Just the opposite: The lack of infrastructure and then reduced GDP fed upon each other in a vicious cycle.

Appleby| 5.23.12 @ 11:13AM

When I was in Holland in 1969 I actually heard many people from Rotterdam say this was true, as their city was far more modern than Amsterdam which had not been bombed flat in the War. At the time I found it pretty bizarre, although it makes kind of a ghoulish sense.

PolishKnight| 5.23.12 @ 4:29PM

Modern isn't always better. I would avoid buying a home made in the USA in the last 20 years or so due to shoddy construction materials and labor. Many of those fine buildings made out of stone that were bombed to dust probably would have stood for centuries compared to cement and cinderblock construction that might last a few more decades...

Bob S| 5.23.12 @ 11:24PM

Progressives love to say that WWII got us out of the depression, so you may have a point.

The aftermath of losing an all-out war was only good for Japan and (West) Germany because the US provided them with so much cheap money for them to rebuild. After WWI Germany was as destitute as any third-world country.

PolishKnight| 5.24.12 @ 4:34PM

That's a useful observation and something to carefully consider about central planning and socialism in general.

In essence, people working hard during WWII motivated by a share national goal. The men accepted slave labor wages (literally as draftees) and the women worked in factories perhaps for also reduced wages. There was government control of resources and rationing. FDR and his well heeled press corps must have loved it (and perhaps even caused it by fiddling while warnings about Pearl Harbor flowed in...)

In the novel 1984, Orwell states that the masses in Oceana were inspired to work harder and longer hours and accept meager rations due to eternal war. What made it work was total control over the populace which was lacking in the former USSR. Word leaked through of the west through people being able to pick up news over borders in addition to people visiting from overseas, etc.

Jabber3| 5.23.12 @ 8:45AM

Hmmm. All these arguments are nebulous at best.

David W| 5.23.12 @ 10:26AM

So per Krugman, another 9/11, but this time taking out an entire city center, would be a good thing. Rebuilding the city plus a lot of business for coroners and funeral homes and casket builders. Krugman is a genius.

JA| 5.23.12 @ 10:40AM

"Krugman, just as he did after 9/11, has fallen for the broken window fallacy."
No, he has not. Krugman is not an idiot. He knows exactly what he is saying.
He is a SOCIALIST. He is a true believer in big govt and govt control in all aspects of society.
All his "economic" commentaries are simply his socialist proposals for more govt disguised as economics.
When are we going to learn that left wingers are liars, deceitful, dishonest and will use any and all means to push their agenda.
And this includes Krugman.

LyleLovett666| 5.23.12 @ 11:02AM

In krugman's world the death of 15,000 people means nothing as long as long as it holds a propaganda benefit to the state.This is a chilling concept that has been played out before to the tune of one hundred million deaths under communism.

Perdido| 5.26.12 @ 5:44PM

20 deaths is a tragedy. 20 million is a statistic. -- Stalin

Mark MacInnis| 5.23.12 @ 11:43AM

Krugman is a fool. He gets facetime on the leftist media because of one unique talent: the ability to spew absolute nonsene with a straight face....

Alex| 5.23.12 @ 1:28PM

This article does an excellent job of erecting a straw man and then knocking him down. The point of Krugman's post is not that Japan is better off because of the tsunami. It is that Japan's recent history is an example of spending causing economic growth. The idea being that even if there had not been a tsunami, spending of the type Japan is doing would have spurred economic growth creating more wealth. Now there are arguments to be made that this is not true, but the whole "Krugman thinks disasters are good" line of attack is good for the echo chamber but useless for actually learning anything.

Bob S| 5.23.12 @ 11:21PM

Krugman places great importance on GDP as an economic indicator. Disaster spur spending on recovery, thereby increasing GDP. Krugman likes increasing GDP. Therefore, Krugman likes disasters which result in disaster spending.

David Shoup| 5.23.12 @ 2:23PM

I wish everyone in DC understood what Ryan understands. Here is another point: creating a job does not necessarily create wealth. If I were a supernatural magician, I could create all sorts of jobs: I would simply eliminate electricity and gasoline engines. Poof! Full employment! But our standard of living reverts to the Colonial era. Does anyone want to try that? Al Gore and the rest of the Limousine Liberals might want us to.

Bob S| 5.23.12 @ 11:20PM

Of course they want to try that. The progressives' goal is reverting society to an agrarian state, where everyone is much easier to control. This was played out with deadly precision in Cuba.

THKrupp| 5.23.12 @ 3:11PM

Im not a big reader of Krugman but in this instance I think he is trying to make a point for using government stimulus to boost the economy. I dont think the believes that national distasters are a good thing for a country, although I could be wrong.

What many of the Kensyians forget is that once you have stimulated the economy you pay back what you have borrowed. You are not just supposed to keep running up debt thinking you can stimulate the economy forever by printing money. In the debate between austerity and stimulus I think that the countries that chose austerity will have a slower recovery but when it happens it will be stronger and more sustained. The countries that choose stimulus will eventually have to pay that money back and that will be a drag on their economy in the future. People also forget that when you already have a huge national debt your options are limited as to how much you can stimulate the economy without causing huge erosions of purchasing power.

In my mind we need to be encouraging people to save. Right now there are very few savings options for the average person that pay any kind of return at all. This savings is what is needed to be used for future investment in the economy. If you do not have money saved then all you are doing is financing all future growth with debt and the consequential erosion of purchasing power. In short interest rates need to go up, deal with the short term pain. Then you have people actually reinvesting in the economy rather than debt made from printed money.

solidground| 5.23.12 @ 3:28PM

I suspect Krugman must also shill for planned obsolescence.

Bob S| 5.23.12 @ 11:18PM

It's the philosophy of Krugman and every progressive, exemplified by a concise statement from Rahm Emanuel: "You never want a serious crisis to go to waste."

POST American| 5.24.12 @ 12:48AM

-----And are we ALL catching the
cunning disinfo op of 'tsunami' even
as the REALITY of the same is
quick limed ---right along with
John Wheeler? ---and Breitbart?

"Understand, whenever you see
people bringing in 'higher degrees'
and phds about something as simply
mathematic as simple economy
-----you KNOW there's a CON underway."
-Informed Radio online

Making things even simpler ---

USURY ----is ---by the WORD of GOD
------------------------------Law of Moses
---------------------------------Figure of CHRIST
--------------an ABOMINATION.

It inherently mocks GOD by wilfully
generating something ---out of nothing.

"It is an act of black magic to deposit
a dollar in a bank --and that bank proceeding
to lend 9. ---AGAIN --this is BLACK magic."
-Informed Radio online

And, perhaps being even more exacting
------MAGI----ick.

USURY has been, since Pheonicia, Babylon
and 'E--jipped' ---the KEY instrument of
capstone subversion --takeover ---wealth
suck-off ---and destruction.

Probably even --FAR longer than that is
we are to believe the research of some.

USURY brings with it the 'cull-chore' of
'cities' and large standing armies ---BOTH
of which would be impossible to sustain without
a USURY money system of credit.

The 'cull-chore' of USURY is pure
actuarial PSYCHOPATHY, usually
administered by, or for, long inbred,
and, of course, PSYCHOPATHIC
families.

The social darwinism of their vision
took on the name EUGENICS in the
nineteenth century.

Social darwinism is really nothing new
---and is, in fact, than 'psy--ant--if-ically'
dressed up Brahaminism.

---------------EUGENICS is, and,ALWAYS has
been, about exterminism ---under various modes and guises.

The 'dream' or 'vision' of EUGENICS is
an utter CON --esp. today under its rebrandings
as 'BYE--O! ---ETH--ICKS' ---and
-----------------------'sssssssss------------------------
---------------------------US---------------------------
--------------------------stain--------------------------
------------------------the Abel------------------------
---------------------------'IT'---------------------------
----------------------------he'---------------------------

"Understand, for over a century now, all
branches of capstone and 'authorized'
'psy--ANTS' is really just a front for
EUGENICS . ALLLL of them at
the top --ARE-- fully on board ---fully
vetted ---EUGENISTS. ---ALLLLL of them."
-Informed online

CHECK IT OUT! ---It's TRUE!

"I do NOT like the EUGENIST.
-------------I do NOT wish to touch his hand."
-Robert Ingersoll
1889

Even --some-- CON--firmed 'A'--theists
were Abel to see this one for what it is.

------------------------------------WHY can't you?

----CUT TO THE CHASE!

USURY moves under the archetypal
shadow of SLAVERY. Some see the kharma
off-load op of capstone generated guilt
for the ordinary people.

Some see something positively Archonic.

YOU DECIDE

------IN FACT, gold mining may itself
have been the FIRST cause of slavery
in the modern sense.

USURY -----begets--------EUGENICS.

EUGENICS moves through the culture
as USURY suberts it --ALLLLL in the name
of 'EEEEK! ---CON---o--ME'.

EUGENICS, first masks itself as 'efficiency',
'CON--venience' and 'MOD---URN--ism'
--and is always 'on the go' towards standardization, and the implentation
and CON--solidation of 'FINAL' ends.

"The Federal Reserve has pumped so
many BILLIONS into [--NAZI--} Germany
that they dare NOT name the total."
-Rep. Charles McFadden
(1935!)

USURY and EUGENICS both operate
under the quickening, usually engineered,
atmosphere of scarcity.

"All through the Depression, farms
still stood, the soil was still fertile,
people could still use their hands
----but it wasn't 'authorized'."

Likewise during the horrific Ukranian
Bolshevik Halocaust etc. --MAOist Halocaust
etc. etc. etc.

The archetypal, ultimate aim and expression
of EUGENICS ----------is GENOCIDE.

STILL NOT CONVINCED?

"When we get through with you
--------YOU'LL WISH YOU WERE A TREE."
-Maurice Strong
UN Rio Summit (1992)
UN Director
At large Globalist
RABID EUGENIST
--PSYCHOPATH--

'RIO + 20' is NEXT month.

It's billed as the 'Make IT Work' phase.

There we have it !

IN A NUTSHELL

ONCE AGAIN!

---FROM the very lips of the private,
unelected, Globalist world banking borg
---YOU ---EN (D).

-------------------------------in this, the 11th hour!

Laine| 5.24.12 @ 2:27PM

You should go back on your meds.

Laine| 5.24.12 @ 2:22PM

As a trained and awarded economist, Krugman cannot be so stupid that he does not know what GDP measures or that his claim is inane: that having to replace lost wealth creates net wealth. So Krugman is writing this gibberish to sway people with a fuzzy understanding of economics who can be misled into supporting the poisonous Obanomics that is in fact crashing the American economy. What Krugman thinks he'll get out of this destruction is an important position in the coming Politburo where a new elite exerts totalitarian rule over new serfs. Krugman thinks he'll trade up in the New World Order he tries to bring about whereas liars like him are a dime a dozen and usually disposed of by totalitarian regimes that don't tolerate what they recognize as chronic malcontents who never think they're getting their due.

POST American| 5.25.12 @ 3:21AM

Laying aside those latest reports
of powdered baby organs being
exported from the Rockefeller
'empowered', US taxpayer underwritten
RED China 'MERE---ICK---CULL' --

ONCE MORE!

--For the Rockefeller Med--heads
who may be slow of ---'REAL--eye--zing' --

"The Federal Reserve has pumped
so many BILLIONS into [--NAZI--]
Germany that they dare NOT name
the total."
-Rep. Charles McFadden
(1935)

And that was decades after their
exceptionally 'warm' Soviet empowerment op

-----And less than 10 years after the
Rockefeller-ROT-child TAX FREE cabal's
'generous' funding of the Kaiser Wilhelm
'Race Purity' Institute in Berlin.

YES! ---YES! ---we'd say things are
'on the go' once again!

---And --YES! ---we'd say there is cause
for ALARM.

--------------Rocklefeller rectum 'bennies'

-------------------n' ROT--child plastic pennies

-----------------------------YES INDEEDY!

Bob From District 9| 5.25.12 @ 8:19AM

You, Mr Young, are a venal and despicable person. There is not one thing in what you quoted of Paul Krugman that even suggests he celebrated the tsunami. All is shows is he is comparing the economies of two countries, one spending and one cutting. Just as one of the hurricanes in the '90s in Florida was analyzed and shown to have profited Florida greatly, as compared to using 9-11 as an excuse for the economic debacle that was Bushonomics.

Your dishonesty in portraying what Krugman said so falsely costs you any possible credibility.

Perdido| 5.26.12 @ 5:53PM

No Bob, Krugman is seriously unbalanced. Read the article again, don't impute.
It's insanity to even think like that.

The American Spectator