Paul Krugman, the second-dumbest Nobel Prize winner alive*

Paul Krugman is stupid. Capital S stupid. Ignorant as the day is long. He longs for senility, knowing it will increase his intelligence. Paul Krugman -- the second-dumbest Nobel Prize winner alive* -- claims that government spending, in the form of a gigantic stimulus package, can create wealth.

* Al Gore still holds the title by a significant margin.

Now, what we’re hearing about the Obama plan is that it calls for $775 billion over two years, with $300 billion in tax cuts and the rest in spending. Call that $150 billion per year in tax cuts, $240 billion each year in spending.

How much do tax cuts and spending raise GDP? The widely cited estimates of Mark Zandi of Economy.com indicate a multiplier of around 1.5 for spending, with widely varying estimates for tax cuts. Payroll tax cuts, which make up about half the Obama proposal, are pretty good, with a multiplier of 1.29; business tax cuts, which make up the rest, are much less effective.

Never mind that Krugman fails to mention where the government gets its money. That's critical, because government only has a few ways it can secure funds:

• It taxes, sucking it out of the real economy to fuel a bureaucracy aimed at penalizing individuals and businesses for their success.

• It spends money it doesn't have, increasing its deficits.

• Or it prints money, which eventually leads to inflation.

Put simply, taxation simply redistributes money and also serves to fund government operations. This drains the economy of productive labor because every dollar pulled out of the economy for taxes can't be spent on goods and services. In short, government isn't exactly a value-creator.

Deficit spending is borrowing, plain and simple, in this case from other countries. Every dollar borrowed must be paid back -- with interest -- in the future.

And endlessly printing money hearkens back to the days of the Weimar Republic, when wheelbarrows were used to transport money for grocery shopping.

As for real value creation? Consider Google. Sergey Brin and Larry Page were a couple of students sitting in a dorm room a dozen years ago. One brilliant idea later, their company's market capitalization is over $100 billion (even after the stock market meltdown). That's value creation.

Putting Paul Krugman in charge of the economy would be akin to letting Rosie O'Donnell run Jenny Craig. The only certainty is the wide scale of the resulting disaster.

Update: High Plains Blogger correctly points out that Krugman is actually the third-dumbest Nobel Prize winner alive. Jimmy Carter edged out Krugman for the #2 slot.

Update II: "A patriotic stimulus."

Hat tip: Scott.