“The lights are going out all over America—literally.” So begins Paul Krugman’s latest NY Times column, in which he laments the crumbling of America’s foundations. The proximate cause of this decline, according to Krugman, is insufficient government spending on infrastructure and education. But the root cause is rhetoric:
How did we get to this point? It’s the logical consequence of three decades of antigovernment rhetoric, rhetoric that has convinced many voters that a dollar collected in taxes is always a dollar wasted, that the public sector can’t do anything right.
I could easily write a thousand-word post refuting this claim, but that would just be more antigovernment rhetoric. Instead, I want to show you a picture. The data comes from the BEA’s NIPA Tables (3.1, 1.1.4, and 7.1).
If antigovernment rhetoric over the last three decades were as effective as Krugman claims, what would this picture look like?
5 Comments
What if you control for economic growth? I imagine it’s a little less dramatic.
Kail, it’s true that real GDP per capita has gone up 60 percent over this period, during which real government spending per capita has doubled. So “controlling” for economic growth would indeed make the graph seem less dramatic. Less clear is why adjusting for economic growth is a good idea. Krugman’s thesis is that antigovernment rhetoric has succeeded in reducing government spending so much that the nation’s foundations are now crumbling. Surely what matters for maintenance of the nation’s foundations is absolute real spending, not public spending relative to private spending.
Eli,
First, Kail is right. (GDP/pop)/(Expenditures/pop) is correct rather than expenditures/pop. Maintainance expenses of civilizations grow with the civilization, not with its population.
Second, you have not answered Krugman at all. You’ve set up a straw man, and I admit it’s a fine one. You have not only knocked it down, but I even see straw in the rafters! The effective way to answer Dr. Krugman is to point to the number of deficient bridges in the U.S. thirty years ago and compare it to the number of deficient bridges today. *IF* the number today was lower, then Dr. Krugman is flat wrong. I don’t believe it is and I don’t believe he is.
Total expenditures is a very misleading number, even per capita, even in real dollars. It is far easier to waste vast amounts of money than it is to spend it effectively. WHERE and HOW you spend it MATTERS! Now I will admit that the judgment of what is effective and what is a rat hole is a political judgment and I would welcome your arguments as to why pouring a trillion or two and nearly 5,000 American (and untolled non-American) lives into Iraq was a wise move.
I’ve looked into your chart and the other two you did not make (receipts and deficits. More, I divided them into total, Federal, and State and local. I was amazed to find that under President Clinton, Federal expenditures actually did decrease! Further, I was amused to find that under the sainted Reagan, per capita taxes actually rose. Ronald Reagan cost the average citizen about $600/yr in real dollars over the course of his presidency.
Apikoros, I think you misunderstand me. I am not trying to refute Krugman’s substantive claim that there has not been enough spending on infrastructure or education. Perhaps he is right. What I think is clearly wrong, however, is the notion that antigovernment rhetoric was successful in reducing government spending and is therefore responsible for the trend Krugman laments. If it had been successful, real G per capita would not have doubled. Krugman’s narrative doesn’t work, even if it is the case that bridges and schools are in fact deficient.
If Krugman’s narrative were instead that America’s foundations are crumbling in spite of large increases in real government spending per capita, and that this is evidence of a government failure, I would not object. It’s true that many public schools are not very good, and I have no quarrel with you or Krugman over bridges. But it’s puzzling to blame the rhetoric of a movement that has not been very successful.
You should only have a graph that doesn’t start at zero if it means the same thing when translated. This is not one of those times.