Fighting the last war

People seem to get caught up in the history of things, and those same people want to repeat the very same things that were done before.  For instance, military strategists got caught up into trench warfare model and thus they were the ones who built the Maginot Line.  When an actual war came, Hitler's armies raced around it.  Even though trench warfare worked in the first war, it was doomed to failure in the next.

When I read Krugman's stuff, I get the same feeling.  Now we are in the midst of the same phenomenon that was visited upon us in the past, allegedly a great depression.  To Krugman, the way out of that depression needs to be repeated again today, hence the trench warfare analogy.  Let's just spend our way out of it.  It certainly worked the last time.  Or so we are led to believe.

The trouble I have with Krugman is that his analysis doesn't focus on causes and effects.  Or if it does, it pretty much follows the liberal model.  Which is income distribution.  If you accept that cause, and then you accept the effect.  That is, the rich take from the poor, so the way to prosperity is through income redistribution.  Raise taxes and spend like crazy and we win the battle against depression.  How does raising taxes produce growth?  How does it produce victory over the enemy called depression?  Does taxing away wealth makes a country prosperous, or does it just postpone the inevitable collapse?  If no solution to the lack of growth is found, no amount of redistribution will prevent a slide into a deeper hole.

Well, Krugman has a Nobel prize and the cachet that brings.  Who am I to disagree?  But if Krugman is the general, his trench strategy has failed.  His strategy seems like the strategy of a Maginot Line: we need more and better trenches.  Never mind that the trenches have been overrun and would have been in any case regardless of how many were built. It doesn't take a Nobel prize to see that this general has lost this battle.

It doesn't take a Nobel prize to see that debt is at all time high.  Going deeper into debt only digs a deeper trench.  Taxing people with already strained budgets is not likely to generate more revenue.  Clearly, the strategy is missing revenues in order to pay for the spending.  Debts don't get paid by borrowing more.  They get paid by spending less and earning more.  Nothing that I have seen from Krugman mentions this.  Just more trench digging and deeper trenches.  More spending and more redistribution and that will put people to work and everything will be fine.  But not economic growth.  Meanwhile, the enemy goes around us and we are getting beaten because we can't pay this debt.

Hopefully, the new generals are better than the old.  Or we could be facing Dunkirk soon.