Crazy Pills

Ozymandias Was Right by A Milder Despot
August 16, 2011, 11:24 am
Filed under: A Milder Despot


On Fareed Zakaria’s CNN show recently, Paul Krugman said

If we discovered that space aliens were planning to attack and we needed a massive build-up to counter the alien threat, and inflation and budget deficits took secondary place to that, this slump would be over in 18 months… there was a Twilight Zone episode about this in which scientists fake an alien threat to achieve world peace. Well this time we need it in order to get some fiscal stimulus.

World War II nostalgia seems to run rampant on the left. If only we could tap into some kind of mankind-unifying principle, in which people stop responding to financial incentives and place patriotism over dollar, we’d have fiscal stimulus big enough to drag us out of any depression.

Krugman readily acknowledges the role that science fiction has in his life. Foundation, Isaac Asimov’s sci-fi series revolving around the lionization of a social scientist, partly influenced Krugman to go into economics. Here he also draws upon the Twilight Zone as a thought experiment. But perhaps the most apt comparison is to Alan Moore’s Watchmen, in which an explicitly left-liberal utilitarian businessman (Adrian Veidt, known as Ozymandias) unites the world by artificially engineering a fake alien threat. Veidt calculates that the world is going to destroy itself via nuclear war, and thus concocts the outside aggressor. In the process, he kills half the population of Manhattan.

Outside of the broken windows fallacy, there is of course something to this. If you could unite the financial system to magically drop their free-market concerns and mobilize in some kind of war effort, you might be able to create the economic conditions for effective stimulus. As Megan McArdle posits,

[W]hat if Keynesian stimulus works, but no one can ever actually afford to do it, short of something like World War II, where the government can tap into a patriotic outpouring of national savings by issuing bonds with negative real yields.

There are two problems: this world does not exist, and World War Two was a massively un-utilitarian exercise that resulted in death and destruction worldwide.

Krugman is positing something even less likely than a world war in his fake-alien-invasion idea, where no wars are actually fought, no one is killed, but somehow you actually do get that magic patriotism that countercyclical fiscal stimulus advocates are looking for. This is, of course, impossible. But it does mean that Krugman might think that Ozymandias was right.


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