Economist Paul Krugman attacked Ron Paul in a recent New York Times column, calling him an “old man” with a “crotchety crank.” In response, the former congressman turned to YouTube earlier this month to deliver a brilliant rebuttal.
“True, there’s no reason to suppose that Paul is deliberately misleading his market—he probably believes his own nonsense.” Krugman wrote in a blog post titled “The Old Man and the CPI.” “But in terms of the underlying dynamics that makes no difference.” (Source: The Old Man and the CPI, The New York Times, July 25, 2015.)
“So who are the people who feel a deep affinity with a crotchety crank?” Krugman continues. “Um, crotchety white guys feeling cranky.”
Paul was quick to rebut the Nobel winning economist’s logic and ad hominem attacks. In a video titled “I’m Sending a Message to Paul Krugman,” the three-time presidential candidate rebutted his archrival’s argument point by point. (Source: Ron Paul: ‘I’m Sending a Message to Paul Krugman,’ Ron Paul Liberty Report YouTube Channel, July 31, 2015.)
“You call me a crotchety crank, but I don’t believe I am that way,” Paul began. “Most people compliment me on not being cranky and having a lot of fun in the world of ideas and presenting the cause of liberty.”
While Paul was a little annoyed by Krugman’s name-calling and even a comparison to Bernie Madoff, he quickly turned the conversation to the real issues.
“The failure of Keynesian economics is loud and clear.” Paul explained. “That’s one of the reasons why I believe that you have become interested in addressing my issues and what I’m talking about.”
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Paul began by demonstrating how poorly ordinary Americans have fared in recent decades, despite soaring government spending as prescribed by Keynesian economists like Krugman. Since 1971, total federal spending has increased nearly fourfold. However, median household incomes have been stagnant for over a decade, growing by less than 25% over the past four decades.
“Your argument is all spending is good for the economy,” Paul argued. “Sure, go over there and bomb a bunch of people. Pay a lot of military personnel. Build tanks and blow them up. Blow up bridges and then rebuild them.”
However, all of this money only goes to the top one percent and the military industrial complex. The government is forced to confiscate more income from the middle class to fund their increasingly ambitious projects, with those politically well-connected receiving the bounty.
“That is where the money goes,” Paul continued. “It’s not going to the people.”
Worse still, deficit spending is spurring inflation, eroding the purchasing power of poorer households. Mainstream economists like Krugman counter by pointing to the Consumer Price Index (CPI), which shows prices are rising by only one or two percent per year. Paul, however, contends that the indicator is misleading, accusing the government of fudging the numbers to paint a rosier picture.
“The CPI doesn’t tell the whole story. It’s used for fiction to try to fool the people and even used to fool the markets.” Paul argued.
“[The CPI] gets changed when it’s going up too fast. We do know that the CPI as measured by the old standards would be going up at four percent [per year].”
“Sometimes you can have a lot of prices going up and they’re not included in the CPI, such as rents. They exclude rents and they’re skyrocketing.”
But Paul concluded on an optimistic note. The current system, he believes, is falling apart at the seams. However, we can reverse the damage that Keynesian economists like Krugman have done by advocating for free markets and individual liberty.
“The answers can all be found in a clear understanding of what liberty is all about, why we need property rights, and why we should continue to keep the principle of self-reliance shouldn’t be punished.”
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