Regularly, we are forced to listen to politicians and talking heads violating the most basic of principles -- making ad hominem (or personal) attacks or engaging in a straw-man argument or equivocation.
Consider this piece in The Washington Post from Joe Scarborough and Jeffrey Sachs, which using the straw man to take down an argument that has been made repeatedly not only by the man under attack, but by a large contingent of economists.
Dick Cheney and Paul Krugman have declared from opposite sides of the ideological divide that deficits don’t matter, but they simply have it wrong. Reasonable liberals and conservatives can disagree on what role the federal government should play yet still believe that government should resume paying its way.And so does Krugman. Economists like Krugman, Dean Baker and others are not arguing that deficits do not matter, and they certainly are not saying that debt is free. What they are saying is that we have short-term issues that need to be addressed that will go a long way toward plugging the deficit and that once the economy is on sounder footing the federal government should turn its attention to deficits.
It has become part of Keynesian lore in recent years that public debt is essentially free, that we needn’t worry about its buildup and that we should devote all of our attention to short-term concerns since, as John Maynard Keynes wrote, “in the long run, we are all dead.” But that crude interpretation of Keynesian economics is deeply misguided; Keynes himself disagreed with it.
This Post piece is the class use of the straw man, defined by Logicalfallacies.info as
one that misrepresents a position in order to make it appear weaker than it actually is, refutes this misrepresentation of the position, and then concludes that the real position has been refuted.Krugman's actual position on deficits, however, is far more subtle than Scarborough and Sachs portray it to be. Krugman wrote a piece the Times' headlined "Nobody Understands Debt" that eventually made its way around the internet as "Why Deficits Don't Matter," which argued that our approach to government debt and deficits is based on erroneous assumptions. "Deficit-worriers," he said, "portray a future in which we’re impoverished by the need to pay back money we’ve been borrowing." The analogy is to family or household debt, which Krugman says is faulty because governments are not households. They do not have to pay the money back in the same way. All governments need to do, he said,
is ensure that debt grows more slowly than their tax base. The debt from World War II was never repaid; it just became increasingly irrelevant as the U.S. economy grew, and with it the income subject to taxation.Just as importantly, "an over-borrowed family owes money to someone else; U.S. debt is, to a large extent, money we owe to ourselves."
This was clearly true of the debt incurred to win World War II. Taxpayers were on the hook for a debt that was significantly bigger, as a percentage of G.D.P., than debt today; but that debt was also owned by taxpayers, such as all the people who bought savings bonds. So the debt didn’t make postwar America poorer. In particular, the debt didn’t prevent the postwar generation from experiencing the biggest rise in incomes and living standards in our nation’s history.The key point, however, especially when it comes to the disingenuous Scarborough/Sachs argument is that Krugman does view debt as potentially dangerous to the economy:
But isn’t this time different? Not as much as you think.
It’s true that foreigners now hold large claims on the United States, including a fair amount of government debt. But every dollar’s worth of foreign claims on America is matched by 89 cents’ worth of U.S. claims on foreigners. And because foreigners tend to put their U.S. investments into safe, low-yield assets, America actually earns more from its assets abroad than it pays to foreign investors. If your image is of a nation that’s already deep in hock to the Chinese, you’ve been misinformed. Nor are we heading rapidly in that direction.
Now, the fact that federal debt isn’t at all like a mortgage on America’s future doesn’t mean that the debt is harmless. Taxes must be levied to pay the interest, and you don’t have to be a right-wing ideologue to concede that taxes impose some cost on the economy, if nothing else by causing a diversion of resources away from productive activities into tax avoidance and evasion. But these costs are a lot less dramatic than the analogy with an overindebted family might suggest.The issue, he says, is not the debt but the debt as it relates to the tax base -- and the current political mania for tax cuts and austerity. Nations with what he calls "stable, responsible governments" or governments "willing to impose modestly higher taxes when the situation warrants it"
have historically been able to live with much higher levels of debt than today’s conventional wisdom would lead you to believe. Britain, in particular, has had debt exceeding 100 percent of G.D.P. for 81 of the last 170 years. When Keynes was writing about the need to spend your way out of a depression, Britain was deeper in debt than any advanced nation today, with the exception of Japan.Krugman, as you can see, has not declared deficits irrelevant. On the contrary, his argument has more to do with politics than economics. But that doesn't matter to Scarborough and Sachs, who never address Krugman's actual argument (aside from pointing out something he wrote in 2001). That makes the Scarborough/Sachs pieces a perfect example of the strawman, because "the position that has been claimed to be refuted is different to that which has actually been refuted; the real target of the argument is untouched by it."
Of course, America, with its rabidly antitax conservative movement, may not have a government that is responsible in this sense. But in that case the fault lies not in our debt, but in ourselves.
So yes, debt matters. But right now, other things matter more. We need more, not less, government spending to get us out of our unemployment trap. And the wrongheaded, ill-informed obsession with debt is standing in the way.
Send me an e-mail.