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How Krugman Exploited 9/11 For His Agenda

From the archives of the opinion pages of the New York Times:

Reckonings; After The Horror

By PAUL KRUGMAN
September 14, 2001

It seems almost in bad taste to talk about dollars and cents after an act of mass murder. Nonetheless, we must ask about the economic aftershocks from Tuesday’s horror.

To be fair, no one has ever associated good taste with Paul Krugman.

These aftershocks need not be major. Ghastly as it may seem to say this, the terror attack — like the original day of infamy, which brought an end to the Great Depression — could even do some economic good.

Yippee! But observe what a ‘Johnny One Note’ Mr. Krugman is. He has been pushing the preposterous and long since discredited argument that disasters are good for an economy for how many years now? A few weeks ago he was fantasizing wistfully about a space alien invasion. Before that, another WWII.

But ask yourself, who else would be crazy enough to view 9/11 as a blessing in disguise that "could even do some economic good"?

But there are already ominous indications that some will see this tragedy not as an occasion for true national unity, but as an opportunity for political profiteering.

People who live in glass houses, shouldn’t live in glass houses.

But isn’t it sad to see how the vaunted "national unity" after 9/11 was already over by 9/14?

About the direct economic impact: The nation’s productive base has not been seriously damaged. Our economy is so huge that the scenes of destruction, awesome as they are, are only a pinprick. The World Trade Center contained 12 million square feet of office space; that’s out of 375 million square feet in Manhattan alone, and 3.5 billion in the United States as a whole. Nobody has a dollar figure for the damage yet, but I would be surprised if the loss is more than 0.1 percent of U.S. wealth — comparable to the material effects of a major earthquake or hurricane.

The wild card here is confidence. But the confidence that matters in this case has little to do with general peace of mind. If people rush out to buy bottled water and canned goods, that will actually boost the economy.

You see? The nation’s financial center being practically wiped out is not serious damage. It’s just a "pinprick." But people buying water and canned goods will "boost the economy."

This is the kind of reasoning that is sometimes uncharitably but accurately called insanity.

For a few weeks horrified Americans may be in no mood to buy anything but necessities. But once the shock has passed it’s hard to believe that consumer spending will be much affected.

Will investors flee stocks and corporate bonds for safer assets? Such a reaction wouldn’t make much sense — after all, terrorists are not going to blow up the S.&P. 500. True, markets do sometimes react irrationally, and some foreign markets plunged after the attack. Since then, however, they have stabilized. On the whole it’s just as well that our own markets have stayed closed for a few days, giving investors time to calm down; the administration was wrong to put pressure on stock markets to reopen right away. By the time the markets do reopen, the worst panic will probably be behind us.

Who is hurting the "national unity" now?

So the direct economic impact of the attacks will probably not be that bad. And there will, potentially, be two favorable effects.

First, the driving force behind the economic slowdown has been a plunge in business investment. Now, all of a sudden, we need some new office buildings. As I’ve already indicated, the destruction isn’t big compared with the economy, but rebuilding will generate at least some increase in business spending.

Again, this is simply crazy talk. It doesn’t take a degree in  economics to realize that it is never good for any nation’s economy to sustain hundreds of billions of dollars of damage.

Never.

Second, the attack opens the door to some sensible recession-fighting measures. For the last few weeks there has been a heated debate among liberals over whether to advocate the classic Keynesian response to economic slowdown, a temporary burst of public spending.

Apparently, President Bush inherited a recession as well as an undeclared war on terror. Who knew? He certainly never complained about it, like some people.

There were plausible economic arguments in favor of such a move, but it was questionable whether Congress could agree on how to spend the money in time to be of any use — and there was also the certainty that conservatives would refuse to accept any such move unless it were tied to another round of irresponsible long-term tax cuts. Now it seems that we will indeed get a quick burst of public spending, however tragic the reasons.

Once again, Mr. Krugman was criticizing the Bush administration and conservatives in his column, and undercutting the "national unity" less than three days after 9/11.

Now for the bad news. After the attacks, I found myself wondering whether some politicians would try to exploit the horror to push their usual partisan agendas.

Er, hasn’t Mr. Krugman just exploited the horror to push his usual partisan agenda of government spending?

Then I chided myself for such an uncharitable thought. But it seems you can’t be too cynical; sure enough, the push is already on to sell tax breaks for corporations and a cut in the capital gains tax as a response to terrorism.

Because it is simply unheard of and probably even criminal to give tax breaks to a business sector that has just suffered a terrible blow.

By the way, note that Mr. Krugman doesn’t seen the terror attack to be bad news. It’s actually good news, since it will lead to more government spending.

But tax breaks for corporations — that is the real "bad news" here. Tax cuts could turn 9/11 into a real disaster.

One hopes that the White House will distance itself from this disgraceful opportunism, that it will deliver the bipartisanship it originally promised.

"Disgraceful opportunism" thy name if Krugman.

But initial indications are not good: the administration developed its request for emergency funding in consultation with Congressional Republicans — full stop. A Democratic contact says that his party received ”no consultation, no collaboration, virtually no information.”

Once again, isn’t Mr. Krugman doing his best to shred the "national unity" here, being like the rabid partisan hack he has always been?

I didn’t want to mention this, but now is the time to draw the line. This tragedy will only be magnified if it is exploited for political gain. Politicians who wrap themselves in the flag while relentlessly pursuing their usual partisan agenda are not true patriots, and history will not forgive them.

History may never forgive this hate-filled crackpot.

But it will certainly forget him.

This article was posted by Steve on Tuesday, September 13th, 2011. Comments are currently closed.

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