Take a look at the upside-down thinking of Mr. Krugman, the man who recently got a goofy award from a bunch of central bankers. Krugman is upset that Obama MIGHT actually let businesses get some tax breaks. The way to help the economy, according to Krugman, is to tax people and redistribute that cash to politically driven recipients.LISTEN for Gard to SLAM Krugman as he should on today's podcast!

Here is a portion of the piece:

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Last week President-elect Barack Obama was asked to respond to critics who say that his stimulus plan won’t do enough to help the economy. Mr. Obama answered that he wants to hear ideas about “how to spend money efficiently and effectively to jump-start the economy.”

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Fred R. Conrad/The New York Times

Paul Krugman

O.K., I’ll bite — although as I’ll explain shortly, the “jump-start” metaphor is part of the problem.

First, Mr. Obama should scrap his proposal for $150 billion in business tax cuts, which would do little to help the economy. Ideally he’d scrap the proposed $150 billion payroll tax cut as well, though I’m aware that it was a campaign promise.

Money not squandered on ineffective tax cuts could be used to provide further relief to Americans in distress — enhanced unemployment benefits, expanded Medicaid and more. And why not get an early start on the insurance subsidies — probably running at $100 billion or more per year — that will be essential if we’re going to achieve universal health care?

Mainly, though, Mr. Obama needs to make his plan bigger. To see why, consider a new report from his own economic team.

On Saturday, Christina Romer, the future head of the Council of Economic Advisers, and Jared Bernstein, who will be the vice president’s chief economist, released estimates of what the Obama economic plan would accomplish. Their report is reasonable and intellectually honest, which is a welcome change from the fuzzy math of the last eight years.

But the report also makes it clear that the plan falls well short of what the economy needs.

According to Ms. Romer and Mr. Bernstein, the Obama plan would have its maximum impact in the fourth quarter of 2010. Without the plan, they project, the unemployment rate in that quarter would be a disastrous 8.8 percent. Yet even with the plan, unemployment would be 7 percent — roughly as high as it is now.

After 2010, the report says, the effects of the economic plan would rapidly fade away. The job of promoting full recovery would, however, remain undone: the unemployment rate would still be a painful 6.3 percent in the last quarter of 2011.

Now, economic forecasting is an inexact science, to say the least, and things could turn out better than the report predicts. But they could also turn out worse. The report itself acknowledges that “some private forecasters anticipate unemployment rates as high as 11 percent in the absence of action.” And I’m with Lawrence Summers, another member of the Obama economic team, who recently declared, “In this crisis, doing too little poses a greater threat than doing too much.” Unfortunately, that principle isn’t reflected in the current plan.

So how can Mr. Obama do more? By including a lot more public investment in his plan — which will be possible if he takes a longer view.

HERE IS THE LINK: http://www.nytimes.com/2009/01/12/opinion/12krugman.html?_r=1&ref=opinio...

Here is Gardner Goldsmith's take on Mr. Krugman:

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The Ignoble Nobel

October 13, 2008

P. Gardner Goldsmith

Leave it to central bankers to misread economics, even while receiving widespread attention from the world-wide media and the populace. The attention, sad as it is, is understandable. After all they are called central banks, and, due to the nature of the pop media and the population that is drawn to it, it’s simply easier for both the reporters and news consumers to focus on one entity as a source for information. Reporters are often scrambling to get their stories produced. Sometimes they are lazy, and have very shallow knowledge bases. News consumers are busy, and often don’t expend the time to research stories on a daily basis. The great television writer Rod Serling realized later in his career that his work was being watered down to make it more palatable to the “masses”. News is no different. While the free market provides many alternatives, catering to the exceptions, the rule of mass media is that the lower your common denominator, the more masses you will attract. The simpler and more emotional story gets the air time. The iconic figure gets the screen. The complex story, and the less splashy figure, get overlooked.

So it’s no wonder that, each year, the “eyes of the world” look to the Nobel Committee, of the Swedish Central Bank, to tell them who has done amazing work in the field of economics. The Nobel Prize in Economics is iconic, and its recipient will garner lots of attention from the mass media. For the media, central is easier. Iconic is easier. It is also very dangerous, because it promotes the agenda of the state over the individual. When a President, Congressman, or government committee can call a press conference and get immediate and free air time, giving reporters their easy “story of the day”, but an individual or group of individuals have to expend large amounts of capital and effort to get the same attention, the tendency is for government policies, statements, and sentiment to overwhelm the daily news, and be given even more “authority” in the eyes of the populace.

As a result, it’s important for news consumers to step back from the pronouncements of the Icons. The Nobel Committee is a perfect example. Over the years, the committee seems to have acquired a case of bi-polar disorder, at times recognizing the insightful and breakthrough economic science of free market thinkers such as Frederick Hayek, and at other times lauding statists such as Paul Samuelson. This year, they have picked the tendentious and boring leftist Paul Krugman for his obvious and inside-the-box theories regarding “economies of scale”.

To the Nobel Economics Committee (which, by the way is a separate creation from the original Nobel Prize, established by Alfred Nobel), Krugman’s insights regarding “economies of scale” and national populations are breathtaking. First published in an “epic” ten page article in the 1970’s, his idea can be distilled to these points.

First, as most everyone knows (evidently that excludes the Nobel Committee) producing more of a product over time can allow for economies of scale. Businesses in nations with large populations that allow them the ability to produce in such a fashion have advantages over businesses in smaller nations. They will be able to produce with these economies of scale, and this, in turn, will have an effect on the workforce, drawing more people to the nation for work, and thus continuing to lower the costs of production -- in this case, the cost of labor. This is, of course, evil and unfair.

What is really unfair is the attention that will now be given to a man who is trapped in a statist economic mindset. Krugman, who has for years been a booster of central planning and statism, cannot break himself out of the nationalistic box. His theory is predicated on the idea that “geographies” prosper, and large “geographies” (i.e. nation-states) with large populations can offer economies of scale to producers, handing them lower-priced labor that will put their competitors at a disadvantage.

In addition to conflating physical geography with artificial geography, what Krugman misses is the idea that a free market exists apart from the state; that borders and nationalism are impediments to the free flow of resources – be they in the form of capital, labor, time, skills, or anything else. National boundaries are arbitrary creations by people with legal monopolies on the use of force, and thus, creating a theory that tells people that “large nations” have advantages over smaller ones misses something essential: Freedom.

If one does not consider invisible borders as impediments (borders by the way, created by the kinds of politicians Krugman lauds as being able to centrally plan economies), to the movement of resources from less productive endeavors to more productive ones, then everyone has the chance to enjoy the advantages of capitalism. Only when politicians create artificial impediments to the free flow of resources does one see natural productivity negatively attenuated, and this holds true for intra-national trades as well as international trades. In a free market, the “workforce” is not split into skin shades, religious beliefs, or nationalities boxed in by borders. The “workforce” is composed of individuals seeking to better their lives. All upward trends in productivity are harmed by government meddling, be it in the form of taxation, regulation or “partnership”. Krugman’s work uses national boundaries as his point of origin, in an attempt to construct a population-based theory of productivity that is of no use because its premises are founded not on basic axioms, but on artificial creations and assumptions. Rather than recognize that free trade allows everyone to take advantage of the world-wide division of labor, Krugman has used his theory for years to serve his larger purpose of arguing that the state has a role to play in “leveling the playing field” in order to let “small participants” compete. On the international level, this comes in various forms, such as international government “aid”, and sanctions against “dumping” (i.e. the practice of selling inexpensive products in a foreign land – horror!). On the national level, it comes in the form of antitrust coercion by the federal government to “make things fair”, in “national plans” to inject tax money into politically favored businesses, and in regulations such as minimum wage laws, and high corporate taxes.

Even if one were to embrace the idea that large nations allow for greater economies of scale, and then, as Krugman does, use this observation not to promote free and open borders, but to promote more central planning in national and international affairs, one would be making a terrible mistake. Historically, larger is not always synonymous with more efficient.

The USSR not only encompassed a large land mass, it had a massive population. Yet its economies of scale were virtually non-existent because its government did not allow for free trade. Its government centrally planned virtually every aspect of society, from education to work and even play. In the United States, some of the most populace states and cities are avoided by businesses. Why? Because, even though there are large labor pools in those areas, the political climate is poisonous to productivity.

Conversely, the economy of Hong Kong was a basket-case before the British government allowed freer market participation. It shot up from “third-world” status to “first world” status with remarkable speed, and efficiency in production is what drove the rise.

Krugman’s citation for the Nobel Prize will only serve to take people’s eyes off the ball. Rather than enticing news consumers to look into what really drives economic productivity, it will keep them concentrating on “the state”, on borders, and on “leveling the playing field” to “make things fair” to those who are at a “disadvantage”. Few will realize that the disadvantages are not inherent parts of a market mechanism, but artificial creations of the state, and planners like Krugman who would like to get government to further regulate their lives.