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Lights Out on Government Intervention?

By Wei Seng

Really?

Paul Krugman, an economics professor, self-proclaimed liberal and columnist for The New York Times, writes in a recent article about how government intervention has been misconstrued by those championing a small government and the disastrous results of the attack on government intervention. While he might be biased towards the government because of his liberal tendencies, his arguments in the article certainly make some sense and are worth reading considering the barrage of articles against government intervention in America these days.

He first describes the crumbling infrastructure of more and more places in America, from roads to education, which he alludes to shrinking state and federal budgets. "Tax increase" is the taboo word these days in an age whereby recovery from recession is still fragile yet "deficit reduction" is on everyone's (at least the Republicans') lips, both at the state and federal level. Even tax increments on the rich are lambasted as a crusade by the government against big business, and we learn in Economics that a disadvantage of high taxes on the upper-income brackets is the repulsion of rich businessmen towards lower-tax countries. But the tax increments could have gone to repairing and reconstructing infrastructure which the majority use, while at the expense of the happiness of "the richest 2% or so of Americans".

Krugman has all along been against withdrawing the stimulus against the recession early, warning that the recovery thus far has been fragile and it will take plenty of time and money for the economy to bounce back to where it once was. The effect of states cutting spending cancelled out the positive effect of federal government spending, and now with federal spending poised for cuts America "is going into reverse".

Krugman is especially angry with conservatives who believe that "a dollar collected in taxes is always a dollar wasted, that the public sector can’t do anything right". A balanced perspective of the economist should be one that allows the free market to operate, but with guidance from the government. It does certainly seem twisted if the government is alluded to be unable to do "anything right", especially for a government like America's, even if governments of many failed states such as Somalia and Afghanistan have seemed unable to really do anything right.

In essence, time to think about what the government can do right, and not what it can do wrong.