Broken Windows Krugman at His Best

Paul Krugman sayeth:

Next, write off anyone who asserts that it’s always better to cut taxes than to increase government spending because taxpayers, not bureaucrats, are the best judges of how to spend their money.

Here’s how to think about this argument: it implies that we should shut down the air traffic control system. After all, that system is paid for with fees on air tickets — and surely it would be better to let the flying public keep its money rather than hand it over to government bureaucrats. If that would mean lots of midair collisions, hey, stuff happens.

This is breathtakingly bad economics--does Krugman really believe the airlines would fly their airplanes, worth millions of dollars, without an effective air traffic control system? Of course they wouldn't. And they just might develop a system of their own that works much better than the FAA.

Krugman continues:

The point is that nobody really believes that a dollar of tax cuts is always better than a dollar of public spending.

I doubt anyone is saying a dollar of tax cuts is ALWAYS better than a dollar of spending. Instead, folks calling for tax cuts over spending as the best form of stimulus are thinking at the margin. That is, they are taking the current condition as the reference point and asking what the more useful change would be. If we were starting from a basis of no government spending or much lower government spending then maybe, but just maybe, a dollar of spending would be preferable.

ADDENDUM: The broken windows reference is explained here.