The Economics of Mass Destruction

by | May 26, 2003

Speech by Donald L. Luskin given at the Russell 20-20 Association Annual Meeting, May 7, 2003 I earn my living as an economist. I try to forecast how economic policies and ideas in the hands of government, business, media and academia move the world and move markets. Unfortunately most of what I see now in […]

Speech by Donald L. Luskin given at the Russell 20-20 Association Annual Meeting, May 7, 2003

I earn my living as an economist. I try to forecast how economic policies and ideas in the hands of government, business, media and academia move the world and move markets. Unfortunately most of what I see now in economics amounts to nothing but a conspiracy to keep you poor and stupid. That’s the name of a book I’m writing, and a web site I run, at www.poorandstupid.com.

Economics was once a noble discipline of moral philosophy, but it has become so disconnected from the real world as to become utterly abstract and amoral. What was once a compass for bringing order to the challenge of collective action has become weaponized — a tool for carrying out political warfare. The economics of mass destruction.

Sound absurd? The sciences of physics and biology were weaponized long ago, and you’ve seen the results. Why not economics?

Let’s start with an example from close to home, of how economics has been weaponized for political warfare.

Paul Krugman is a Princeton University economics professor who writes a column twice a week on the op-ed page of the New York Times. He is an enormously influential public intellectual. Krugman made his reputation as an economist with revolutionary ideas about the dynamics of international trade, and many people think he’s on the list for the Nobel Prize for that work. But Krugman’s columns are unashamedly politically biased to the left, even by the standards of the New York Times. And he’s not above using his prestige as a renowned economist to make his opinions seem like facts.

Krugman frequently writes about Bush’s budget and his tax-cut proposals. Bush is turning America into a “banana republic.” Bush is selling out “the little people.” Bush is a stooge of “the plutocrats.” Okay, that’s just name-calling, no matter how prestigious the name-caller. But Krugman is smart. He’s like one of those kids in grade school who could think of nasty nicknames for the other kids — and somehow they always stuck.

An example. In his April 22 column, he wrote about Bush’s claims that his tax-cuts will create 1.4 million new jobs.

“…let’s pretend that the Bush administration really thinks that its $726 billion tax-cut plan will create 1.4 million jobs. At what price would those jobs be created? …The average American worker earns only about $40,000 per year; why does the administration, even on its own estimates, need to offer $500,000 in tax cuts for each job created?”

Now I have to tell you I don’t by any means love everything about Bush or his administration. I’m not a Republican and I don’t think of myself as a conservative. But I’m on the record as a big supporter of Bush’s tax-cuts. I’ve talked about them with Bush personally, and I’m absolutely convinced that they’re the right thing to do and that Bush deeply understands why they’re the right thing. When I read that Krugman column, my heart stopped

Don Luskin is Chief Investment Officer for Trend Macrolytics, an economics research and consulting service providing exclusive market-focused, real-time analysis to the institutional investment community. You can visit the weblog of his forthcoming book ‘The Conspiracy to Keep You Poor and Stupid’ at www.poorandstupid.com. He is also a contributing writer to SmartMoney.com.

The views expressed above represent those of the author and do not necessarily represent the views of the editors and publishers of Capitalism Magazine. Capitalism Magazine sometimes publishes articles we disagree with because we think the article provides information, or a contrasting point of view, that may be of value to our readers.

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