Moral money

I don't usually read Paul Krugman, but the title of his latest column in The New York Times caught my attention: "Mugged by the Debt Moralizers." He attempts to make the case that Americans concerned about government debt (i.e., the wellspring of the Tea Party movement) are cutting off their noses to spite their faces. To insist that government live within its means is shortsighted "moralizing," because government is the only entity that can stimulate the economy enough to get people spending again. Or, to borrow President Obama's metaphor, huge influxes of cash are the fuel needed to drive this car out of the ditch.

"The years leading up to the 2008 crisis were indeed marked by unsustainable borrowing [only coincidence, perhaps, that a Republican was the president at the time], going far beyond the subprime loans many people still believe, wrongly, were at the heart of the problem." The problem, per Krugman, was unsustainable private debt: wild speculation funded with borrowed money. This caused the credit crunch and the widespread uncertainty that makes businesses big and small unwilling to expand. The only solution is more government spending. Much more.

To the argument that stimulus spending has so far failed to even turn the motor over, much less get that car out of the ditch, Krugman's response is that a trillion here and a trillion there is too little. He's been saying this ever since the first stimulus, so it's nothing new. What irritates me is labeling legitimate concern as "moralizing." "Where does the money come from?" is a question he does not ask. It can only come from two sources: taxation and the printing press. One curtails economic freedom and the other curtails economic value. Where's the morality in that?

But Krugman writes as though the federal government could create value, operating entirely free of laws of supply and demand-or any other law, like that mandating honest weights and measures and making the borrower a slave to the lender. In response to the Times article, one commenter wrote, "It's far, far better to leave children debt than to raise them in poverty." If we could fast-forward 30 years and ask the children if they would rather have skipped the art and gymnastics lessons or been saddled with a 60 percent tax rate, I wonder what they would say?

Fortunately, the Krugman kind of reasoning is too lofty for a majority of Americans. Here's hoping the majority will keep voting.