David Angelo

Those Who Do Not Learn From The Past…

…become respected liberal economists. 

As mentioned in my last post, I wanted to comment on the reactions of Krugman and Ezra Klein to QE3.  Well, they finally got around to saying something, and it’s more pathetic than I could have imagined.

Just a quick review.  QE3 is The Federal Reserve’s plan to create $40 billion/month out of thin air to buy mortgage-backed securities from banks with the stated intention of lowering long-term interest and mortgage rates while boosting employment.

Let’s ignore, for a minute, that 30-year fixed mortgage rates are at 3.55%, which is 50% cheaper than the rates that caused the 2000-2006 housing boom - and just barely higher than current inflation.  (What’s the Fed’s target when that’s already a record low?  How long until banks pay customers to borrow money?)

Let’s also ignore QE1 and QE2, which were the same program.  Since their multi-trillion dollar implementation began in 2008, we’ve seen higher unemployment despite a decline in the size of the labor force (blue line):

So, let’s forget that QE1 and QE2 were both failures.  Let’s also ignore that interest rates are already at record lows.

Let’s also ignore that the stated goal of this program is to re-inflate the housing bubble that caused this mess in the first place.

If we can - somehow - do all that, then these comments might make sense:

It’s good to see the Fed moving, finally.

… 

In effect, the Fed seems to be trying to “credibly promise to be irresponsible”, which is what I advocated way back when in this kind of situation.

That’s the reaction from Paul Krugman, the smartest living economist, according to Paul Krugman. He links to a blog post from 2010 as an example of what he advocated “way back when.”  Let’s go back further, to 2002:

To fight this recession the Fed needs more than a snapback; it needs soaring household spending to offset moribund business investment. And to do that, as Paul McCulley of Pimco put it, Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble.

Spot on advice then; and even better advice now!

Let’s moveon.org to the young genius aspiring to one day be the next Krugman.

In a blog titled, “Here’s why everyone is so excited about what the Fed did yesterday” (really?), Ezra Klein writes:

Imagine you got a choice of superpowers. You could be invisible, you could fly, you could be really strong, or you could create unlimited amounts of money. You might well choose the money one. The other ones are cool for a bit, but they’re not all that versatile, and they may well get you into trouble.

The best way to think about the Federal Reserve is that it basically has a superpower. It can create as much money as it wants. Real, American money.

Uh huh.

Anyone can choose the “superpower” of printing money.  They’re called “counterfeiters” and they’re usually villains.  If printing money is so great, why isn’t Klein extolling the virtues of xeroxing your own money at home?  And, just as a matter of record, creating “unlimited amounts of money” is more likely to “get you into trouble” than flying or being strong. 

And so, on Thursday, Fed Chairman Ben Bernanke said the Fed had finally decided to do something about unemployment. Something big. Something that might actually work.

Something big…and something that’s already failed twice.  It’s called QE3 for a reason.  He continues…

The way the Fed’s plan works — if it works — is that buying all these bonds will drive down long-term interest rates, which will give businesses and investors more incentive to spend now as opposed to sitting on their money waiting for later. It will make mortgages even cheaper, which should accelerate the housing market’s recovery.

Yeah, I’m going to run out right now and buy 30-year bonds with negative real yields on the hope this Fed action might bring me BIGGER losses!

And - yes - let’s hope for another housing bubble!  What can go wrong with that??

….This is the intellectual elite!!!

We’re doomed!

(side note: on the first day after the QE3 announcement, rates on treasuries are UP. Whoops!)

QE3

I wanted to include some reaction from around the internet to the latest Fed announcement, but there doesn’t seem to be much.  Krugman (aware the announcement would happen this morning) called in sick last night and my other favorite “wonk” (I hate that word) Ezra Klein hasn’t put any opinion up on his “Wonkblog.”

So I’ll just tell you what I think, and refute them after they’ve made their requisite Rachel Maddow appearances. 

This is a disaster.

Don’t get me wrong - it’s great for the 1% and politicians.  The DJIA was up 1.55% to close at 13,539.  Not bad considering there’s absolutely no underlying fundamental economic reason for that near-record close except QE3 - which is an open-ended commitment by the Fed to buy $40 billion worth of mortgage-backed securities (MBS) each month.

And, what is QE?  According to “Wonkblog” (is there a more pretentious word, really?):

Short answer: It’s an unconventional monetary tool used by central banks to stimulate the economy.

Nope!  

Short answer: It’s printing money.

Long answer: It’s printing money for the purchase of MBS.

Longer answer: It’s printing money, which is “inflation,” to bail banks out of bad mortgage investments while trying to stimulate a housing market which is collapsing despite already record-low mortgage rates.

Even longer answer: It’s a multi-trillion dollar conflict of interest for the Federal Reserve.  As the value of MBS are inherently linked to prevailing interest rates, if the Fed raises rates, they will crash the value of their own assets. (Keep in mind that The Federal Reserve is the most powerful “regulatory” body in the banking system.)

Longest answer: It’s printing money to bail out banks and this policy - which has amazingly already failed twice - will eventually crash bond prices once investors wake up to the strangely esoteric reality that inflation is inflationary.  When that happens, it is “game over” for the U.S. Treasury, taxpayers, and, well, the economy.  

This is a complete disaster.  And I’m saying this as someone who’s been investing to take advantage of it for years.  Despite a huge market rally, my portfolio still trounced the Dow Jones today - but I’d rather not have had QE because it’s so obvious the program is only buying a few more months (weeks?) of fake growth at the expense of already weak economic fundamentals.

Neil Irwin, who represents the typical level of intellectual inquiry found in economics reporting, chimes in on Twitter with:

Whatever you think of the substance of decision, it makes me respect Bernanke & FOMC more that they were willing to shrug off politics.

Yep.  Throwing the dollar under the bus to boost stock prices and temporarily lower bond yields just two months before an election is about as “apolitical” as it gets…

There’s a lot of fancy, “wonkish” words going around about what the Fed is doing.  But you need to understand: they are just printing money and giving it to banks in exchange for junk assets.  That’s it.  It’s not going to help unemployment. It’s not going to fix anything except bank balance sheets.  It’s certainly not going to help the self-styled martyrs in “the middle class.”

The ways it WILL affect you are - immediately - through higher gas prices; and - long term - with higher prices for everything else.

When Ezra and Krugman get around to commenting on how this program is great (albeit too small!) for the Average America, they will certainly try to reassure you that there’s no risk of inflation.  Make sure to pass that on to the cashier at Sunoco.

THIS is what Occupy Wall Street should be protesting.  But after months of stewing over not getting free stuff for themselves, they seem to have all moved back onto their friends’ couches.

Just consider the very real possibility that investors may, one day, no longer want to lose money in bonds with negative real returns.  Then what is the Fed gonna do?  They can’t stop asset purchases because our fake economy now depends on it.  Will they keep expanding QE?  Buy stocks? Buy things off ebay?   

Maybe they’ll buy us all an iPhone 5!  That should keep the progressive activists off the streets, anyway.

This is a big win for:

Stockholders - especially guys like Warren Buffett.

Bankers - who get to offload bad assets AND continue middle-manning T-bill sales to The Fed.

Politicians - who can say “look, the stock market is up!” without ever mentioning that gas prices are up even more - which they deceivingly blame on “mideast instability.”

and “Liberal Economists” - who will trumpet their influence on the “free market”(!) while hedging against QE’s inevitable failure by saying it’s “not enough.” Without irony, they’ll praise this as a step in the right direction - despite QE being the most egregious implementation possible of “trickle-down economics.”

The news is all reruns. 

Response to: Broken Windows and the iPhone 5

Well, as usually happens with “all things Apple” - delusions have supplanted reality.  As Krugman points out, there’s some hope that the new iPhone will boost the U.S. economy.

He then goes on to explain how that vindicates the broken window “theory” (as he puts it).

The key point is that the optimism about the iPhone’s effects has nothing (or at any rate not much) to do with the presumed quality of the phone, and the ways in which it might make us happier or more productive. Instead, the immediate gains would come from the way the new phone would get people to junk their old phones and replace them.

In other words, if you believe that the iPhone really might give the economy a big boost, you have — whether you realize it or not — bought into a version of the “broken windows” theory, in which destroying some capital can actually be a good thing under depression conditions.

Well, the iPhone will NOT help the economy.  It may help Apple stock, which - according to CNBC - is now “the economy.”  (Because it’s somehow impossible to see the total market cap of all the Nasdaq 100 components without adding them all up manually, I can only guess AAPL is about 40% of it these days.)

Disposable consumer gadgets don’t help the economy.  They may raise GDP. They may raise that one stock everyone in the country apparently owns.  They may even let you take more artistic photos of your coffee.  But they are bad news!

For starters, 51% of people buying Apple toys do so using credit.  To me - a rational adult - this is incredible!  In the “worst economic downturn since The Great Depression,” a huge portion of the population is willing to go further into debt to  buy high-end designer telephones.  That’s staggering.

More debt will not help us.  More gadgets we don’t need won’t help us.  More people on Twitter and Instagram won’t help us. A bigger trade deficit with the country that makes Apple products won’t help us.

Of course, that all assumes you’re grown-up enough to understand that consumer spending doesn’t drive the economy.  There’s many out there (Krugman, chiefly) who want to pretend that if we all go out and buy new houses and cars and spend money we don’t have and can’t pay back - somehow everything will be fixed!

If reckless spending is good for the economy, then we should all thank American hero MC Hammer for showing us how to sacrifice and make the tough choices in life - like getting a swimming pool shaped a dollar sign.  

Any idiot can buy stuff.  It doesn’t “boost” the economy to burn money - and resources - on junk.

Chicago Teachers Strike

A little over a year ago, when the teachers in Wisconsin went on strike against governor Scott Walker, it was a huge national story.  Walker was the devil-incarnate!  Workers rights were in jeopardy!  The middle class was being killed!

Of course, he was a Republican.

Chicago, on the other hand, is run by Obama sidekick Rahm Emanuel. So, obviously, this is COMPLETELY different.  

(Can’t wait to see how Ed Schultz covers this! Self-flagellation?)

This strike is absurd.  Just as it was in Wisconsin.  Of course, the Wisconsin governor not giving into union demands was considered “the scam of the century” according to Michael Moore.  Funny; he hasn’t said a word yet about the Democratic mayor’s teacher strike. Hmmmm.

Principles shouldn’t be contingent on the people involved.  (Just a rule of thumb!)

But let’s listen to the teachers gripes.  Maybe they have some good points.  From a union press release:

They attempted to ram a poorly thought out longer school day down our throats; and, on top of that they want us to teach a new curriculum and be ready to be evaluated based on how well our students do on a standardized test. It has been insult after insult after insult. Enough is enough.

Okay.  Now let’s look at some basic facts.

The average teacher salary in the Chicago Public Schools was $74,839 last year. (source)

That’s not bad, considering they get 3 months paid vacation and only work a 5 hour and 45 minute school day (source) - which they are furious is being made longer.

So much for that argument they’re doing it “for the kids,” right?

From the teachers:

There is an attack on public institutions, many of which serve, low-income and working-class families.

An attack on low-income and working-class families is keeping their kids out of school all day in a city with a higher murder rate than Kabul.  For all the talk about how “greedy” Wall Street is - it’s a nice change of pace to see the Average Joes out there demanding more money for cushy jobs that already pay more than most.

Isn’t it interesting how the liberal community - so hysterically out-spoken and supportive of teachers during Scott Walker’s merciless slaughter of labor unions - is so quiet now.

Maybe they’re - gasp - learning?

…probably not.  And why would they?  Most probably went to public school.

Response to: The Zombie That Ate Rand Paul’s Brain

Krugman decided to follow up yesterday’s propaganda (which I easily refuted in minutes using data from his preferred sources) with an ad hominem knife-twist into Rand Paul that is equally ridiculous.

Krugman:

Aha. It seems that I was giving Rand Paul more credit than he deserved. Think Progress has the video, and it’s clear that Paul was completely shocked at the notion that government employment had fallen under Obama, rather than soaring.

How did that happen? Almost surely it’s a case of a zombie lie that has gone unchallenged in the hermetic world of movement conservatism, so that people like Paul know, just know, something that ain’t so. I wrote about this way back: the usual suspects seized on the Census bulge in employment as evidence of a big-government surge; and because nobody in that business ever admits having been wrong, this became a “fact” that people like Rand Paul believe. He wouldn’t have made this mistake if he ever read or listened to an analysis from nonpartisan sources, but he evidently doesn’t.

The key part here is “Paul was completely shocked at the notion that government employment had fallen under Obama.”

“Under Obama.”

Again, for those new to politics, I’d like to explain the way government is set up.  There are state government (run by what’s called “governors”), and the federal government (with a chief executive known as “the president”).  The government “under Obama” - the part he controls - has grown since he took office.  I showed you the data (from the Federal Reserve…not the Koch Brothers).  Here’s another angle, this time excluding the Post Office employees (as they operate somewhat independently):

(spikes belong to the census)

That data is from the “non-partisan” Federal Reserve; so, Krugman can’t really accuse me of bias here.  But how is it he can claim “government employment [has] fallen under Obama?”  When, under Obama, it has demonstrably grown?  Even when you factor in the Post Office layoffs?

How did that happen? Almost surely it’s a case of a zombie lie that has gone unchallenged in the hermetic world of movement conservatism, so that people like Paul know, just know, something that ain’t so.

Let’s change “movement conservatism” to “MSNBC” and have “Paul” refer to the first name of our esteemed, intellectually honest, Nobel laureate.

VirgilTexas comment reply

VirgilTexas responds to my last post:

“And has anyone - other than public employees leeching tax dollars - been adversely affected by this?” Other than the people who use government services? (literally everyone)

“This” being a reduction in government employees.

Okay, so let’s disregard the very obvious fact that the point of the blog was to show Krugman was being misleading about numbers, which I proved, very obviously, beyond a shadow of a doubt.

Let’s instead consider the real-life and theoretical implications of government workforce size.  VirgilTexas must think we’d all be better off if the IRS quadrupled its number of employees - as that is a government service we all use.  In fact, if larger government benefits everyone….then maybe we should all work for the government to maximize those benefits.

The problem with “government services” is that they are inherently inefficient.  Increasing the scale of those inefficiencies - at the public’s expense - does not benefit the public - it puts a greater tax burden on them in exchange for larger bureaucracy.  

Because the government workforce reductions concern state and local, let’s look at one example.

In my town of Los Angeles, California (where people assume government can solve everything) we have more government employees, per capita, than the national average (source: LOSA106GOVT/CALOSA7POP).  

And what do we get for that?

Extremely high taxes and a police state.  A very large portion of the city budget goes towards parking enforcement, which is a necessary source of revenue to pay for oversized government.  I can’t give you the exact figures, because - in a prime example of government productivity - LA County’s website isn’t working.

In California, the average state worker made $71,385 in 2009 - $7,977 MORE than the average private sector taxpayer who foots the bill.  How can that possibly be justified?

This is a lopsided arrangement.  I think most Californians, if they could undo their socialist brainwashing, would agree they’d be better off with fewer government employees, fewer parking tickets, and less red tape.  The lines at the DMV aren’t long because there’s fewer employees - they’re long because there’s so many they had to come up with redundant, impractical jobs for them all to do.

Personally, I’d welcome a reduction in traffic cops - especially if it means an end to $191 jaywalking fines.

But, by all means, please let me know about your positive experiences with government.  Maybe I’ve just been unlucky every single time!

Response to: Government Employment

Just some textbook propaganda from Krugman today.  I’ll make this quick.

His post:

During today’s round table on ABC, Rand Paul seemed shocked at my claim that government employment is down under Obama. Of course, it is. But maybe he’s thinking of the fact that since govt employment rose under Bush, we’re still at higher absolute levels than we were a decade ago.

That is, however, a strange comparison: other things equal, you’d expect government employment to grow with population (remember, the typical government employee is a schoolteacher). And here’s what has happened to government employment per capita:

I know Republicans know, just know, that government has surged under Obama. But it ain’t so.

Okay.

This graphs TOTAL government employees, including state and local.  Obviously, during the bubble years of Bush, states had much higher revenue - which they unwisely used to expand government.  After the recession, they had to reduce people on the government payroll; which is a good, rational thing to do when you can’t afford it.  And has anyone - other than public employees leeching tax dollars - been adversely affected by this?  Democrats pretend like kids are showing up to school with no teacher in the classroom.  These reductions are necessary (just ask one of California’s many bankrupt cities).

Krugman also glorifies big government by imploring us to “remember, the typical government employee is a schoolteacher.”

Sweet.  But the typical federal government employee is not a schoolteacher. And federal government (the thing Obama runs) HAS grown:

The big spike being the census.

Also keep in mind that the total number of federal employees has risen in the past few years, despite tens of thousands of layoffs by the bankrupt Post Office.  Imagine how much higher the numbers would be if the baseline was constant.

I know Republicans know, just know, that government has surged under Obama. But it ain’t so.

Except it has.  In employment and spending.

Of course, this comes with the caveat that we’re talking about the Federal Government - not Muncie, Indiana’s school committee. 

Response to: Wicksell Goes To China

Krugman continues to promote the fantasy that we can sell debt until the end of time without consequence.  Fun!  Let’s all just stop working and have Uncle Sam borrow money to pay our bills.

The idea that we are at the mercy of the Chinese — that terrible things would happen if they stopped buying our bonds — is very influential. Yet it’s just wrong.

Think of it this way: the argument that interest rates would soar if the Chinese bought fewer bonds is the same as the argument that interest rates would soar when the U.S. government sold more bonds — which, as you may recall, was the subject of fierce debate more than three years ago — and you know how that turned out.

Not quite.  The argument that rates won’t soar because they haven’t yet is the same argument as saying, in 2006, that home prices can’t fall because they’ve been rising for years. The parallels between the bond and housing bubbles are alarming - but even more alarming is Krugman’s inability to see them (you’ll note the massive government intervention in both markets as a common factor).

It’s not just about China deciding to stop bond purchases.  What if they SELL their existing holdings?  That’s $1.16 trillion in bonds being dumped on the market to compete with new Treasury offerings.  That won’t affect interest rates?  That won’t cause “systemic risk?”

But also, consider what China does when it stops buying U.S. bonds.  It buys “stuff.”  While the Treasury ups their bond sales to fill the gap, the Chinese will be using their dollars in the marketplace - commodities, consumer goods, real estate, etc.  That won’t affect inflation?  Inflation won’t affect interest rates? Do basic economics stop applying because Krugman has some propaganda to push?

What China does by buying bonds is add to the excess savings — which makes our situation worse. (This is just another way of saying that the artificial trade surplus hurts our economy — just another way of stating the same thing). And we want them to do less of it; far from fearing that they will stop, we should welcome the prospect.

What China does is vendor-finance the U.S. consumer.  Americans can buy iPads (made in China) because they have plenty of disposable income left over from not paying their share of the national debt - which, currently, amounts to $53,333 per capita ($16 trillion/300 million). I agree that it would benefit the United States, in the long run, for China to stop doing this - but it will involve a very painful loss in our standard of living that few are likely to welcome.  Hell, we practically had riots over whether or not women should pay $15/month for their recreational sex (and we decided they shouldn’t).

China certainly has more power over us than we have over them.  I believe they are just trying to figure out how to get out of their vast, complicated U.S. investments with as little pain as possible.  They aren’t buying bonds anymore - they’re buying time.  It’s the same way a lender may wait a few years to foreclose on a delinquent homeowner - they want to limit their losses (not lower property values through excessive regional foreclosure rates, not want to pay for maintenance, etc). 

But, that day of reckoning is surely at hand.  And the Chinese TELL us that!

A July 28, 2011, Xinhua News Agency (Xinhua) editorial stated: “With its debt approximating its annual economic output, it is time for Washington to revisit the time-tested common sense that one should live within one’s means.”

An August 3, 2011, a Xinhua editorial stated: “Should Washington continue turning a blind eye to its runaway debt addiction, its already tarnished credibility will lose more luster, which might eventually detonate the debt bomb and jeopardize the well-being of hundreds of millions of families within and beyond the U.S. borders.”

A Xinhua August 6, 2011, editorial said: “The U.S. government has to come to terms with the painful fact that the good old days when it could just borrow its way out of messes of its own making are finally gone. International supervision over the issue of U.S. dollars should be introduced and a new, stable and secured global reserve currency may also be an option to avert a catastrophe caused by any single country.”

A Xinhua editorial on August 8, 2011, stated: “The days when the debt-ridden Uncle Sam could leisurely squander unlimited overseas borrowing appeared to be numbered as its triple A-credit rating was slashed by Standard & Poor’s (S&P) for the first time on Friday. China, the largest creditor of the world’s sole superpower, has every right now to demand the United States to address its structural debt problems and ensure the safety of China’s dollar assets.”

source (PDF)

We certainly shouldn’t be afraid of China; China should be afraid of us.  And, while we’re at it, WE should be afraid of us.

Just think logically, and this all makes sense.  Don’t listen to the “experts.”  They’re deluded and wacky.

For example, consider the analyses of the following brain trusts:

Standard & Poor’s
China credit rating: AA-
U.S.A. credit rating: AA+

Fitch
China credit rating: A+
U.S.A. credit rating: AAA

Moody’s
China credit rating: Aa3
U.S.A. credit rating: Aaa
source 

So China, a nation currently lending the U.S. over a trillion dollars, has a lower credit rating than the U.S., which is $16 trillion dollars in debt.  Have fun explaining that one! Makes for a great conversation starter! 

Response to: Medicare and Medicaid Costs (Utility Post)

Krugman has a post on how government medical insurance is more cost-effective than private insurance.

As if we needed more evidence to show how out-of-touch with reality he is.

Studies by the Urban Institute and more recently by CBPP find that Medicaid is significantly cheaper than private insurance. This is partly because of lower administrative costs; also, Medicaid, more than Medicare, bargains hard, using things like a limited formulary that lets it drive a harder bargain over drug prices.

Where to begin….

I tried for about 15 minutes to get recent, accurate data on Medicaid administrative costs.  Couldn’t find any.  So, obviously, they aren’t too proud of it, whatever it is.

I usually hear that the percentage of expenditures spent on administration is smaller for Medicaid and Medicare than for private insurance.  This is always a bullshit line.  I’m no fan of the private carriers, by the way, but they OBVIOUSLY spend more on administration than (1) the service used exclusively by expensive sick old people, and (2) the service used by expensive sick poor people.  And, yes, the average Medicaid patient is less healthy than the private insurance patient.  From the study Krugman cites:

The privately insured cost less than the Medicaid population primarily because they are healthier and thus use less health care.

So shut up about comparing administrative costs forever.  The relative administrative costs for a block of exclusively old and infirm patients is - now and forever - going to be lower than the general population.  When someone has a pulled muscle, the paperwork will make up a greater portion of the cost than when someone has triple bypass surgery. 

What else?

Now we’re celebrating the “limited formulary” of Medicaid to keep costs in line?  When it comes to private insurance companies, I hear nothing but endless bitching from liberals whenever one decides to employ a “limited forumlary”; like excluding birth control - an expected cost that doesn’t even fit the insurance model.  But, when Medicaid has a limited formulary - it’s suddenly a magical cost-saving option that empowers everyone with choice!

What else?

Medicaid is cheaper because it sucks.  Guess what? Skateboards cost less than cars.  Did you know that?  I can save money by going to a witch doctor, too.  No specialists accept Medicaid and a lot of regular physicians don’t want anything to do with it.  The ones who DO take medicaid invariably make up the expenses by tacking other procedures onto people with private insurance.  You know how, when they find out you have private insurance, doctors suddenly love to give X-rays?  That’s because it’s easy profit to make up for the loss in billing they incur from the Medicaid patients. In effect, people paying for private insurance not only pay the taxes to fund Medicaid, but their health plans subsidize the program as well (at higher premium cost to them, of course).  

What else?

According to Krugman’s source, “Average medical expenditures in 2005 for non-elderly, low-income adults in Medicaid were $4,684 per individual, compared to $3,669 for the privately insured.”  Great.  So, in case you were wondering, this whole assumption that Medicaid is cheaper is based purely on regression analysis.

I’ve yet to see a post from Krugman that isn’t complete bullshit.

Response to: Public Versus Private Cost Control in Health

bahahahahahahaha

hilarious!

Krugman quotes Austin Frakt explaining how much better the government is at controlling costs:

But what government systems do well is hold down costs. They use central planning. They use their large market power to negotiate for reduced reimbursement (see Part 2). They buy drugs cheaper. They eliminate profit and overhead. This is what government does well. It’s why every other country that has more government involvement than ours spends less than we do.

Krugman himself adds:

Yep. But the GOP doesn’t want to hear it. It’s the triumph of what they want to believe over the evidence; why, next thing you know they’ll be denying the evidence for climate change, and even the evidence for evolution.

EVIDENCE? That “what government systems do well is hold down costs?”

Is this real?  Is this a joke?

Here’s some “evidence,” Smugman…

The Government’s pet project, Amtrak, was recently embarrassed by the revelation that it pays $16.15 for the cheeseburgers it sells - at a loss - for $9.50.  Frakt isn’t kidding when he says “they eliminate profit.”  Trouble is, taxpayers still pick up the difference.  McDonalds makes a profit on $1 cheeseburgers, while the government has you paying $6.65 for every cheeseburger someone else eats!  Chalk one up for the private sector.

There are really too many examples of ridiculous government excess to warrant further reply.  But, on its face, the Krugman/Frakt argument is ridiculous.  ”It’s why every other country that has more government involvement than ours spends less than we do.”  Is that why the Soviet Union went bankrupt?

The government doesn’t do anything efficiently.  Even in the industries where it has COMPLETE monopolies (passenger rail, post office), they lose money while providing terrible service at a high cost.  They don’t “use their large market power to negotiate” anything.

Seriously.  People believe this stuff?  And Krugman feels confident enough to smugly report it?  At what point in your life have you ever had an interaction with government and thought, “GEE! This sure is efficient and cost effective!”?

Here’s more “evidence” on government efficiency and their ability to “hold down costs”… Wastebook: A Guide to Some of the Most Wasteful and Low Priority Government Spending of 2011

Yep. But the GOP doesn’t want to hear it. It’s the triumph of what they want to believe over the evidence;

You’ll note Krugman doesn’t actually provide a shred of “evidence” that the government is more efficient than the private sector - he just quotes another idiot’s opinion.  That’s the level of “scientific observation” we get from the esteemed Nobel laureate.  Well, I just provided a bunch of actual evidence with actual numbers.  Good luck getting the same from him.