Have Some Data? (When Economists Tug on the Heartstrings)

Nobel Prize-winning economist, New York Times columnist, deficit enthusiast and noted Teddy Ruxpin-lookalike Paul Krugman wrote a wistful, melancholic piece today entitled America Goes Dark.  In it, Krugman accurately paints a picture of the upsetting signs of decay afflicting cities and towns around the country; streetlights are shut off, paved roads are chopped back to gravel for want of maintenance money, etc.

And after lyrically narrating our American Regression, Krugman goes completely off the rails – he actually blames Ronald Reagan and a supposed lack of government and municipal spending over the last three decades.  Great story, but not a datapoint in sight to back it up.

And then along comes the Streetwise Professor with a UFC-caliber smackdown of a post – with actual data that shows that municipal spending actually increased dramatically since 1980:

From the beginning of the Dark Age, with the ascension of Darth Reagan to the presidency in 1980, state and local government spending as a fraction of GDP rose from 15 percent to 22 percent.  Even stopping at the time of the financial crisis, in 2008, state and local government accounted for 19.6 percent of GDP.

In other words, state spending grew faster than the economy during the entire Age of Anti-Government Ideology.  The rate of increase of that percentage was actually higher in the 1980s, under Reagan, than in the 1990s, under Clinton.  Indeed, it was higher still in the 2000s, when the new Dark Lord was president.

Insofar as state and local debt is concerned, in 1990 it totaled $993 billion.  In 2000, $1.28 trillion, and in 2008 $2.25 trillion.  Note the high rate of growth during the allegedly anti-government Bush years as opposed to the Clinton period.

It is very unfortunate that the Professor had to dig this data up, it was much more fun when we could curl up beside the fire as Uncle Paul spun the tale of starved local governments and the havoc of low taxation.

So if state and local governments were not starved of resources, as Krugman asserted, then what exactly has gone wrong?  Because he certainly is right about the backwardation happening from sea to shining sea…

According to the Streetwise Professor, the municipalities did what half the nation’s homeowners did: They budgeted and planned as though things would be better in the future.  And then the future didn’t deliver but the debt was still there.  This while Reagan was 6 feet under.

Anyway, for the full rebuttal, head over at the link below.  Facts versus puffery – the facts win again.

Source:

Earth to Krugman: “Data” and “Anecdotes” are Not Synonyms (Streetwise Professor)