Economist and New York Times columnist Paul Krugman is brilliant. I’m not sure how correct he is all the time. But he writes that he pretty much always is so who am I to question?
But question I must, if ever so humbly. In short, Krugman feels that our economy needs to be stoked, seriously stoked. The argument is that money is incredibly cheap to borrow at the moment (and for many, many moments since 2009), our infrastructure is crumbling, Americans are underemployed and the wages for most are stagnant and have been for some time. By spending more money on infrastructure, more are employed and with healthier salaries. Since consumer spending makes up over 70% of the economy, one would think fuller employment and bigger take-home pay would jolt the economy into greater growth. Likewise, and just as significant, the country’s infrastructure would be in much better shape for the future.
This argument makes sense, at least to a degree. It is impossible to grow an economy when everyone and every company is holding onto their money. When more comes in the till, we all feel freer to spend. And it would be difficult to argue against the multiplier effect of infrastructure spending. But rarely, like never, is anything so complex like our economy ever that simple. Krugman just might be more on target than most anyone else. However, his absolutism should evoke some skepticism and caution.
Let me use Krugman’s latest column as an example. He writes about the election in Canada of the Liberal Party’s Justin Trudeau on the platform of substantial increases in government spending. Krugman obviously believes this is the right thing to do and that the United States should follow in the same path. But here is where the absolutism is troubling because it is so selective of the facts, as if we’re living in a one-size-fits-all world.
The United States has roughly ten times the population of Canada. This fact, by itself, greatly limits any comparison. But even more impacting might be the homogeneous nature of Canada’s population. 77% of the population is White and 14% is Asian. This means two groups make up over 90% of Canada’s population and that almost four out of every five Canadians is White. Only 3% are Black and 1% Hispanic. Contrast that with the U.S.. About 60% White, 17% Hispanic, 13% Black, 5% Asian.
Diversity is an exceptional thing. When this country is at its greatest, its most expansive, is when the ethnic barriers are down or transcended. Bit it has proven to be not an uncomplicated process, which likely makes our economy more complex to manage. So Mr. Krugman can tip his hat to our neighbors to the north. But last I checked, the U.S. economy seems to be chugging ahead of almost all others, Canada included.