Disastrous consequences

John Steele Gordon at Contentions:

Krugman, Herbert, and the business-as-usual political establishment they speak for are unable to process the information that there is a limit to the debt burden even so fabulously rich a country as the United States can bear without disastrous consequences, and that we are getting perilously close to that limit.

Gordon assumes that his readers already believe what they need to believe to enjoy his column – whose main purposes seem to be 1) to ridicule liberals and 2) to muse about “Henry Graham,” a character in a “long-forgotten movie.”

Gordon doesn’t address Krugman’s well-known position – in short, that the government should be running a huge deficit, as huge as necessary, especially as there are no indications (bond prices, inflation, etc.) that it should be a primary concern during a time of high unemployment, excess productive capacity, and depressed demand. As tellingly, Gordon completely ignores Herbert’s lead paragraphs:

We can go to war in Iraq and Afghanistan, and threaten to blow Iran off the face of the planet. We can conduct a nonstop campaign of drone and helicopter attacks in Pakistan and run a network of secret prisons around the world. We are the mightiest nation mankind has ever seen.

But we can’t seem to build a railroad tunnel to carry commuters between New Jersey and New York.

So, Herbert thinks that, if we can pay, and pay, and pay for Iraq and Afghanistan and beyond, surely we can pay for something much less expensive that actually is needed.  On the other hand, if, as JSG apparently believes, we cannot pay for projects that would provide needed jobs, directly stimulate depressed economies in other ways, and allow future development, then when is anyone else over at Contentions going to put 2 and 2 together?  When are they going to start warning their readers about the past, present, and future costs of military expeditions in foreign lands within a budgetary context so “perilous” that combined state and federal financing of a mere tunnel project threatens “disastrous consequences”?

My guess is “not soon,” for, if placed in such a context, which is implicit in JSG’s critique, certain neoconservative projects, the entire neoconservative analysis and worldview, might start looking like one of those luxuries that the “befuddled” Henry Graham can no longer put on his regular tab.  In other words, if Krugman is wrong and JSG is right, then maybe Henry Graham and leading liberal suspects aren’t the only characters “unable to process the information that there is a limit.”

But who wants to know?  Better to switch on TCM – though you won’t find A New Leaf.


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32 comments on “Disastrous consequences

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  1. No, in your new Trotskyite mode, you miss the point, they are willing to underwrite massive expenditures that don’t notably improve employment prospects, because it means ‘wasteful’ consumption of energy, disturbing the natural realm, et al. By contrast, they are not interested in the government’s key function, which is defined as protection of the realm, because they see those foes as less threatening than what they consider the ‘bitter clinging ‘cohort’

  2. @ miguel cervantes:
    Sorry, but your first sentence doesn’t make sense. You seem to be talking about something else in the second half than in the end of the first half. You want to try again?

    Saying that “defense of the realm” is “the government’s key function” a) don’t make it so, b) doesn’t prove that the neocon project equates with same or is necessary to it in any way, and c) doesn’t address the point, which is, regardless of whether you think said project is worthwhile or even necessary, JSG et al are pennypinchers on the verge of “disastrous consequences” when it comes to domestic spending, but distributors of blank checks with no apparent concept of consequences when it comes to anything else.

    Realms that can’t pay their bills eventually can’t defend themselves either. Either we’re hitting the wall or we’re not. If we’re not, then build the effin tunnel. If we are, then we can’t afford endless expanding war in pursuit of a definition of victory.

  3. “the effin tunnel” is a state project, much like the Gravina bridge, as was the Big Dig, aproject that might have been conceived by Whitey
    Bulger, in it’s implementation, We have another pink elephant down here, a underwater tunnel crossing the bay to the beach; which is going forth like our Mothership like empty cultural center, yet another Coliseum for ‘bread and circuses, while police salaries are being cut, yet another absurdity from the mind of Ionesco. The stimulus was a blank check to dead people, convicts, and ARRA signs announcing the signs of other projects yet to be built, one can’t help that was the intention of the Apollo Alliance, that helped draft it

  4. @ miguel cervantes:
    I’m assuming that the FN Tunnel is a worthwhile project, an argument that Herbert and Krugman strongly assert, and that Krugman supports in some detail, and that JSG doesn’t deny. The feds are already participating in the project on some level – if you care, you can check the details. Your pre-cooked reaction to ARRA is irrelevant both to their argument on the project, as well as to my argument regarding JSG’s post.

  5. @ miguel cervantes: miggy, the tunnel is NOT a state project. connecting NJ and NY by building a road across the boundary line is pretty hard to define as other than interstate.
    and this tunnel is far from a pink elephant. this is pretty important for NJs white-collar commuters and NJ’s governor is FOS on this.
    he’s got to be planning on hauling his dishonest butt out of the state and leaving things no better than when he took office.

  6. If the tunnel is an economically worthwhile project there’s a very straightforward alternative available for getting it built. Set it up as an independent authority with no guarantee by government and let it sell bonds based on the revenues it’s going to collect from people using the tunnel.

    Oh, but that would presume people willing to pay the true cost of commuting by rail. . .

  7. The way these projects works, is that some Federal funds are involved,(re the aRRA) but ultimately the state ends up carrying the burden, and since NJ, is in such fine fiscal shape, well it will all turn out
    ‘wonderful good’

    Now I ask myself questions, like why do we have theelectrical capacity that we should have over the last 30 years, why have we reduced our domestic oil production to that narrow strip in the Gulf, which we should have learned the folly of, with Katrina and Rita; and we have compounded it with this blasted moratorium, and subsequently subsidizing Petrobras yesterday, Pemex today and PDVSA tomorrow. Why can’t the schools impart the most basic
    literacy and numeracy, but the AGW hoax is the “God of the Copy
    Book Headings.

  8. @ Sully: Pretty interesting set of ideas, Sully.
    I would b interested in learning about how the true cost of that tunnel commute is larger than the true cost of private auto commuting, why the Port Authority isn’t one of them bond-and-collect authorities, and why the government is no longer the proper sponsor of public works,

  9. It should be noted here I think that if we can’t pay for the tunnel today, there is still the possibility that we can pay for it tomorrow. However, we can’t simply pay for Iraq/Afghanistan tomorrow. Wars need funding today. One can of course argue that we shouldn’t be fighting the wars, but the fact remains that we’re currently in the fight.

    War (especially for a democracy) is often something that is put upon a country against its wishes. Afghanistan falls into that category – we would rather not have suffered through the 9/11 attacks and the resulting (overwhelmingly supported) invasion of Afghanistan. But the 9/11 attacks indeed occurred and a month later the invasion ensued. GWB couldn’t say “Well, I think we’ll be in a better financial situation in 2007, so I’ll schedule the invasion of Afghanistan in 2007.”

    A nice tunnel would be great to have, but there isn’t the urgency for this tunnel as there usually is for war.

  10. @ fuster:

    From Wiki re MTA formerly Triborough Bridges and Tunnels

    Surplus revenue, formerly used for new automobile projects, would now be used to support public transportation. Since then, more than $10 billion has been contributed by the TBTA to subsidize mass transit fares and capital improvements for the NYC Transit Authority, Long Island Rail Road, and Metro-North Railroad.[3]

    So, it turns out NY/NJ pols already had the 10+ billion in excess charges on bridge tolls. They could have used that to build a new tunnel but they blew it on subsidizing mass transit fares. . . for people who are not willing to pay the cost of mass transit, as I said before.

    I never said government should shun all public works; but when a public work strictly benefits one particular group of citizens that work should (insofar as possible) be paid for by that group of citizens (like bridge and tunnel tolls).

  11. @ Sully: 1) notice that “AND capital improvements”?
    those had been put off a long, long time. you might want to check on how much of that $10B went to that.
    2) Subsidizing mass transit is a good thing. You might think about that just a tad and you might ponder if people’s unwillingness to pay more for it might be due to some rather large sums spent on convincing them that it’s truly wonderful and necessary to their happiness to own an automobile or three.
    Rational thinking about the “true cost” of transportation sort of suggests that there’s not much rational thinking about it.
    Sometimes a representative government enacts legislation or implements policies that are actually . . . helpful.
    See Canal, Erie . . . or Big Ditch, Clinton’s.

    3) Benefits of this thing might be a little more widely spread than you seem to envision.
    Traffic into Manhattan during the day is absurdly congested. you spend more time idling or inching forward than you would believe. It’s a horrendous waste of gasoline and people’s time (an hour or more every day per person adds up) and once you get your car into town, parking it is ruinously expensive (The average price for monthly parking in Manhattan is $431, last year. daily rates around $30-40).

  12. @ fuster:

    Traffic into Manhattan during the day is absurdly congested. you spend more time idling or inching forward than you would believe. It’s a horrendous waste of gasoline and people’s time (an hour or more every day per person adds up) and once you get your car into town, parking it is ruinously expensive (The average price for monthly parking in Manhattan is $431, last year. daily rates around $30-40).

    And yet people still insist on commuting by car, paying more than the cost of the bridges they use. At the same time people obstinately refuse to use and pay for mass transit at rates that make it sustainable. Perhaps they’re telling us something about how badly mass transit systems are run by the very flunkies you want to entrust with more money for use in building a tunnel.

    But if you insist on government involvement I have another suggestion that can prevent the NJ governor from being able to starve the city of cheap day labor from his state. Have NYC issue bonds to build the tunnell and pay off the bonds by charging New Jersey tunnell commuters a surcharge for the privilege of entering the city.

  13. @ Sully: No, Sully, they’re telling us something about the limitation of economic theory that rests on assuming rational choice and also assumes that rational choice for individuals adds up to rational choice for a society.

    It may be a perfectly rational choice for Mr Christie to call off the project. It may get him out of New Jersey and onto a broader stage. But that choice may be a pretty poor one for the people of the state.

    I’m pretty familiar with the mass transit systems in NYC and long have been. There was a time when they were badly run and worth shunning. Most decades they haven’t been and they’re pretty fine for the last decade and a bit.

  14. @ Sully:
    It seems to me that you’re making an assumption or several assumptions about what options have been examined and are practical. Since it involves multiple governments and has been under consideration for at least 20 years, there may be numerous legal and other complications. Up until recently, NJ may have insisted on participation in part because its governor and others wanted credit and whatever degree of control they get from their end.

    The inability of the private market to settle transportation issues – in particular railroad rates – and government’s success in doing what private methods couldn’t were a major impetus to Progressivism. Transportation and public works involving multiple jurisdictions touches on too many factors for the electorate in any separate jurisdiction to absorb them all rationally.

    No market is wholly free, but transportation is even less relatively free than other markets. It’s also a quality of life issue that’s very difficult to quantify fully. Instead of waiting around another generation for some plan that conservatives can pretend is sufficiently “private,” maybe the people can choose to suit themselves, through their democratically elected representatives. Most of the first two centuries of U.S. history were filled with this kind of thing. It mostly worked pretty well in the opinion of most Americans. Krugman and Herbert, and in his own way JSG, too, are right to suggest that the failure of a project like this one is suggestive of something having been lost.

  15. Seeing as Bloomberg is driving people out of the city, like some reverse
    Pied Piper, NJ is likely to have the better end of the deal. We’ve seen these Pharaonic projects, and they haven’t ended well. We have certainly lost something of the ‘can do spirit’ the narrowing of the
    vision for Space exploration, that would anger Goddard, the subtext
    of the GZM is the failure to build a commensurate monument to the fateful day

  16. @ CK MacLeod:

    there may be numerous legal and other complications. Up until recently, NJ may have insisted on participation in part because its governor and others wanted credit and whatever degree of control they get from their end.

    I agree completely. NJ pols wanted a chance to share in the fat envelopes of cash that could be milked from such a project. And they wanted their fair share of the “jobs” that could be created for their pals.

    The inability of the private market to settle transportation issues – in particular railroad rates – and government’s success in doing what private methods couldn’t were a major impetus to Progressivism. Transportation and public works involving multiple jurisdictions touches on too many factors for the electorate in any separate jurisdiction to absorb them all rationally.

    And as a direct result the passenger railroads are as messed up and as undesirable to commuters as they have become.

    Instead of waiting around another generation for some plan that conservatives can pretend is sufficiently “private,” maybe the people can choose to suit themselves, through their democratically elected representatives.

    And it seems to me that the people have done just that by electing Christie. So how come you’re whining about it?

    Your arguments are the same ones that make virtually the entire budgets of governments at every level immune to cost benefit analysis.

    Perhaps Krugman in his wisdom can propose $14 Billion in cuts elsewhere in the budgets of NYC, NY State and NJ to free up the money for this project if it’s so important. Or, perhaps he can propose a change in work rules, union involvement, style of management, etc. that will credibly prevent this project from becoming another endlessly more costly big dig.

    Or, perhaps Krugman could come clean (as Thomas Friedman has) and openly propose that we move toward a less messy system like that in China and North Korea, where transportation projects are run by rational all powerful leaders rather than by elected politicians who need to worry about voters too stupid to understand the exquisite logic of continuing to spend on pet projects long after the treasury is bare.

  17. @ fuster:

    “No, Sully, they’re telling us something about the limitation of economic theory that rests on assuming rational choice and also assumes that rational choice for individuals adds up to rational choice for a society.”

    And you, Krugman and CK are telling us that choices made by interested individuals who won’t pay the bills should override choices made by individuals who will pay the bills.

    Meanwhile, I’ve proposed off the top of my head two alternatives for funding the project that would more closely apportion the cost to those who would benefit from the project, neither of which you have addressed.

    Here’s another possibility. NYC commercial real estate owners would presumably be the biggest beneficiaries from the greater availability of labor coming in from NJ. Fund it with a special real estate tax surcharge dedicated to paying off the bond issue necessary to build the tunnel.

  18. @ Sully:
    Actually, that passenger rail traffic has declined is a function of numerous factors. One such factor is an obscure mechanical device known as “the automobile.” Another is a peculiar contraption called “the airplane.” Neither of which would have flourished in the U.S. to the extent that they have, if not for massive public works programs, including the interstate highway system and numerous airports wholly or largely developed via public initiative.

    A stock analyst who specialized in airlines once told me that, on balance, the entire sector has never gotten out of the red. In air travel as in many other sectors where quality of life (or life and death) is key, we often prefer to impose our will rather than wait however many generations for the market to work its way to under-served sectors or around uneven starting points or contingent obstacles.

    Would you have preferred that, prior to retaliating against AQ or invading Iraq, we had floated a national bond issue or a national value added tax to fund the enterprises? After all, the operations were supposedly on balance beneficial to the citizenry. Maybe that’s how all government should be funded. Well, we wouldn’t even need a government. Military entrepreneurs would offer to go fight our enemies if enough people bought their Osama Bonds. Or they could try bake sales.

    Of course, Christie was democratically elected and has the ability to back NJ out of the project. The questions are whether that’s a good thing – supposedly he’s re-thinking – and whether, as you were initially arguing, the project should be profitable or make some other kind of sense under some particular pseudo-free market arrangement.

    Cost-benefit analysis has been performed on this project. Christie’s argument isn’t that the project doesn’t make sense on its own terms. It’s only that NJ can’t afford to hold up its end of the deal at this time.

    Tom Friedman’s sinophilia is a red herring. Krugman’s and Herbert’s positions are clear and open: They think that we should be able to find a way to do projects like this one. They believe that the main impediment is ideological opposition to tax increases of any kind, and Krugman believes in a much, much larger “stimulus” that presumably would have made it much easier for cash-strapped states to move projects like these forward. You can disagree with their positions, but making those arguments doesn’t make someone a communist.

  19. The problem really lies in the structure of the ARRA, another effort composed differently might have worked, in resolving some of the
    real infrastructure issues, but that wasn’t the point of the exercise, just as it was for TARP, otherwise why wouldn’t they dedicated the
    funds to the Toxic Assets in the title. Friedman is more than a fool, in so many areas, he’s a pompous wannabe Mandarin, who will not be affected by the schemes he agitates for.

  20. @ CK MacLeod:

    So, because we live in an imperfect world afflicted with unintended consequences stemming from formerly made uneconomic decisions we should forevermore pour more unaccountable money into projects that make no economic sense. . .

    Thus is it that we have a government subsidizing tobacco farmers and maintaining high tariffs to sweeten the profits of cane sugar farmers while it spends money on advertising programs aimed at curbing the consumption of tobacco and refined sugar.

  21. Sully wrote:

    So, because we live in an imperfect world afflicted with unintended consequences stemming from formerly made uneconomic decisions we should forevermore pour more unaccountable money into projects that make no economic sense. . .

    Absolutely. Reducing all public concerns to “economic sense” is also a kind of totalitarianism, based on the usual false presumption that a limited language for understanding or “rationalizing” human life has all of the necessary answers. I don’t know about you, but I don’t live my life in the hope that it will make economic sense, and I don’t think that making economic sense is the highest and worthiest goal of public life either. In fact, the only thing that makes economic sense to me is an economics that allows for the senseless/not yet made sense of, the inefficient/not yet understood, the irrational/not yet rationalized, the in-computable/not yet and possibly never computed.

  22. @ CK MacLeod:

    Reducing all public concerns to “economic sense” is also a kind of totalitarianism

    But it is, at least, the soft totalitarianism resulting in the minimum enslavement of citizens of the productive class to the whims of citizens adept at manipulating the political process.

    Freeing public concerns from the necessity of making economic sense results in the sort of hard totalitarianism that Krugman wants, wherein all output can be disposed of by citizens adept at manipulating the political process.

    By the way, can you point to a government program (aside from defense) that Krugman opposes or wants to cut in any significant way?

  23. But it is, at least, the soft totalitarianism resulting in the minimum enslavement of citizens of the productive class to the whims of citizens adept at manipulating the political process.

    But it’s Tom Friedman who lacks confidence in democracy? Progressives generally view themselves as seeking greater democratic control over economically significant decisions, disposal of public money, etc.

    Your formulation is based on a set of ideological presumptions, including the idea that “citizens of the productive class” are not also already “enslaved” – also that society can and should be divided into “productive” and “non-productive” classes (in which case wouldn’t it be more “efficient” just to get rid of the latter?) – also that any decision not based on “economic sense” equates with a mere “whim.” What if the decision in favor of supposed economic sense (defined by an economism of efficiency treated as the primary goal) is itself arbitrary and contingent – a “whim”?

    Freeing public concerns from the necessity of making economic sense results in the sort of hard totalitarianism that Krugman wants,

    That’s inane – unless you believe that all of American political and economic history amounts to “hard totalitarianism.” The Erie Canal was “hard totalitarianism”? The social safety net is “hard totalitarianism”?

    Don’t really know what Krugman thinks can or should be cut. I do know that he doesn’t believe that the problem right now is overspending. At all. I don’t know if he goes all the way over into social democracy and accepting the trade-offs that come with a much expanded public sector, less income inequality and higher security, as against lower overall economic dynamism.

  24. @ CK MacLeod:

    Progressives generally view themselves as seeking greater democratic control over economically significant decisions, disposal of public money, etc.

    How they view themselves doesn’t signify. The way they act is like totalitarians happy with democratic control only when it furthers their goal of making all “money” “public money” to be doled out by them on the basis of political correctness.

  25. @ Sully:
    How progressives view themselves signifies as much as how conservatives view them and view themselves. It’s a point of view on the nature of public decisionmaking and the reasons for forming a government along one set of lines as opposed to another – for instance, for the purpose of forming a more perfect union, promoting the general welfare, providing for the common defense, and securing the blessings of liberty… or, alternatively, for the sake of promoting the highest possibly economic efficiency from top to bottom in order to reward the productive class.

    You’re writing in buzzwords and ideological shorthand. “Politically correct” belongs in some other discussion, unless you’re in favor of politicians making only incorrect decisions. Or unless you’re a radical anarchist… In which case you’ll have to do without money, since all money is public. There is no “money” without a “public,” and no modern currency without a modern state. I know that conservatives generally believe that money was created by God to reward the productive class for working hard and having the right ideas (like believing that money was created by God etc.), but that’s a fairy tale.

  26. “So, because we live in an imperfect world afflicted with unintended consequences stemming from formerly made uneconomic decisions we should forevermore pour more unaccountable money into projects that make no economic sense. . .”
    Hmm. What does this remind me of? Oh, yeah. The endless war on terrorism.

  27. It would seem clear that is the direction that Krugman is leaning toward, Money is a method of exchange for goods, it predates the state. On an earlier point, companies like Blackwater seem to be trying
    to fill the gap of regular and even irregular forces, but I doubt they can ever expand to a point to totally encompass that constitutional
    responsibility nor should they, that way lies the armies of Sulla and Marius

  28. Money is a method of exchange for goods, it predates the state.

    Where, when? Where there is “money,” there is a state and its guarantees. Prior to or outside of state sovereignty in some form, you’re just bartering coins or other tokens as precious objects. How much would the $20 Bill in your wallet be worth without a US of A?

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