Paul Krugman, "America Isn’t a Corporation": Indeed, If America Was a Corporation, It Would File for Chapter 11

Paul Krugman, in his latest New York Times op-ed entitled "America Isn’t a Corporation" (http://www.nytimes.com/2012/01/13/opinion/krugman-america-isnt-a-corporation.html?hp), informs us:

"But there’s a deeper problem in the whole notion that what this nation needs is a successful businessman as president: America is not, in fact, a corporation. Making good economic policy isn’t at all like maximizing corporate profits. And businessmen — even great businessmen — do not, in general, have any special insights into what it takes to achieve economic recovery."

Indeed, America is not a corporation. Fiscal year 2011 was the third straight year during which the US experienced deficits of over $1 trillion. Moreover, during the Obama presidency, America has increased its debt by $4 trillion. If America was a corporation, it would file for Chapter 11 bankruptcy.

Krugman would have us know that even great businessmen do not have any special insights into what it takes to achieve economic recovery. So who possesses these special insights? Simple answer: Krugman, who once again is telling us that the US government should not reduce expenses:

"Consider what happens when a business engages in ruthless cost-cutting. From the point of view of the firm’s owners (though not its workers), the more costs that are cut, the better. Any dollars taken off the cost side of the balance sheet are added to the bottom line.

But the story is very different when a government slashes spending in the face of a depressed economy. Look at Greece, Spain, and Ireland, all of which have adopted harsh austerity policies. In each case, unemployment soared, because cuts in government spending mainly hit domestic producers. And, in each case, the reduction in budget deficits was much less than expected, because tax receipts fell as output and employment collapsed."

Query: Did Greece, Spain and Ireland have an alternative? For example, without an emergency EU and IMF rescue package, Greece would have defaulted on its debt.

As reported yesterday by Athens News (http://www.athensnews.gr/portal/11/52207):

"Rather than pushing through blanket wage cuts on underpaid groups of employees in the public and private sectors, the IMF sources stressed that selective reductions in exorbitant salaries and closure of wasteful work stations needed to be introduced in dozens of public utilities (DEKO) and other state agencies 'in order to attract foreign investment'."

Sorry, Paul, but is there anything wrong with slashing exorbitant salaries in the public sector and closing wasteful work stations?

America is not a corporation, but it's also not Greece. Any speculation whatsoever regarding a potential US default on its debt would send the world economy into the abyss, and risking such ruinous talk by running additional trillion dollar annual deficits would be less than wise.

Krugman concludes:

"America certainly needs better economic policies than it has right now — and while most of the blame for poor policies belongs to Republicans and their scorched-earth opposition to anything constructive, the president has made some important mistakes. But we’re not going to get better policies if the man sitting in the Oval Office next year sees his job as being that of engineering a leveraged buyout of America Inc."

Most of the blame belongs to the Republicans? I thought the Democrats controlled both the House and the Senate during Obama's first two years in office. But more to the point, what are Obama's policies? Yes, it's easier to tar the Republicans than to proffer and implement solutions.