Whether he intended to or not, Princeton economics Professor Paul Krugman provided the perfect postscript to my discussion yesterday about providing more voodoo to the poor:
In the school of Idiot Savant Economics, we have a saying: "Buy low. Sell high." Actually, I think we may have co-opted that one. Still, the point remains that right now, all the things we need to invest in our future, labor, money, equipment, are all as inexpensive as they're going to get. There is plenty of capital out there, as Krugman explains with another graph:
For future reference. In a depressed economy, with the government able to borrow at very low interest rates, we should be increasing public investment — the true cost of the resources is negligible, so the rate of return is very high, not to mention the desirability of creating jobs.
Here’s what has actually happened, as measured by the sum of state, local, and federal nondefense investment:
Public Investment in the Slump
Plus, since the real problem with the economy is lack of consumer demand due to high unemployment and wage stagnation, this would cure the thing that needs curing.
Instead, though, the two clowns who are most likely to be elected President are obsessing about deficits. Deficits are nonsense right now. Even Keynesians like Paul Krugman say so. The only thing that they are willing to invest in is greater ability to blow up other peoples' countries at a time when we have no enemies worthy of the name.
I can't help thinking that if John Maynard Keynes were around today, and someone asked him if more defense spending counted as paying people to dig holes, he'd say "No. That's actually way more stupid than paying people to dig holes and fill them up again." He'd certainly be right if he did, because these days we use our military when we really shouldn't. That's exactly what you'd expect a country with our priorities to do.
UPDATE: I've changed the title of this article to "Screw The Deficit - It's Time To Invest", instead of "Screw The Deficit - We Need Jobs". Other than that, it's the same, with the exception that I've also added a link about consumer demand.