Krugman's Possible Solutions to the Financial Crisis: Fake Space Aliens, Time Travel

Readers may recall last month when Nobel Prize-winning economist Paul Krugman suggested that the government should stage a fake alien invasion to boost the economy. Today on his NY Times blog "Conscience of a Liberal" in a post entitled "Solving the Financial Crisis" Krugman commented that we should "use some of those faster-than-light neutrinos to send a message to the past, warning them not to deregulate (and not to let Greece join the euro)" alluding to the recent speed-of-light results at Cern. Krugman added, "Failing that, there are always those fake space aliens."

Where I can appreciate Krugman's use of comic relief in discussing possible solutions to the global financial crisis, I cannot help but agree with one who commented on the blog post: "I respect you immensely but save the comedy for Colbert." I would imagine that the more Krugman uses comedic language in explaining the global financial crisis, the less individuals will be willing to take his economic insight seriously.

Another individual commenting on Krugman's blog post wrote, "You forgot civil war." Interestingly enough, I examined and explored this possibility not long ago. Not in terms of an economic solution, but the mere prospect of a left vs. right battle in the US. Even so, a civil war in the US would not bring economic prosperity any more than an earthquake would bring economic prosperity. Congresswoman Jeannette Rankin: "You can no more win a war than you can win an earthquake." On the topic of civil war, we have to think back to the "broken window fallacy".

It is one thing to add humor to a grave situation, but when the person adding the humor is someone who the world regards as one of its greatest economists, the effect and implications of the quips are different. Imagine that you were suffering from a horrific, debilitating disease while hooked up to a life support system in a hospital room surrounded by your family and friends. While you were in great pain and despair not knowing what was going to occur next, the doctor walks in and says, "I have good news! What we could do is try an experimental new treatment! We could try using those faster-than-light neutrinos to slingshot you back to the past when you were not sick!" And then the doctor busts out laughing while everyone else looks on somberly.

On this topic, I suppose another example would be if you were a sailor in a submarine in the midst of a great naval battle. While your ship is under attack, the captain quips, "Let us all say a prayer that aliens come and save us! Anyone have any faster-than-light neutrinos lying around that we could use to send a message back in time that could have prevented us from getting in this mess?" There is an apparent difference in the comment's humorous effect if the comment comes from a fellow sailor or the captain of the submarine himself.

Of course, Krugman is neither a medical doctor nor a naval captain, but he did receive a PhD from MIT. And not only is Krugman a famed economist, economics professor, and published writer, but he also won the Nobel Prize in Economics. In this way, some may look to Krugman as a sort of "doctor" of economics to remedy the global financial crisis. As one of the supposed greatest economic minds on the planet, who else would know what to do if not Paul Krugman? Thus, on a personal note as more or less an amateur economist, I am not getting as much of a laugh out of the suggestion that using faster-than-light neutrinos to send a message back to the past would solve the financial crisis.

I guess I got a bit of a laugh out of Krugman's suggestion that staging a fake alien invasion would boost the economy, but unfortunately, I think in that case, Krugman was speaking in a mild, honest seriousness. I guess what I am trying to say is that I would expect such humorous quips to be coming from someone like Lewis Black or Andy Dick. And if Lewis Black or Andy Dick had made such comments, they would no doubt be more amusing. Krugman should therefore probably save us the comedy and just stick to economics. Where we are looking to economists like Paul Krugman for viable solutions for the world's economic problems, I am not laughing. I am sure many individuals who have lost their jobs and homes during this Great Recession are not laughing as well.

Even so, in light of Paul Krugman's recent address to the Eastern Economic Association, the profession of economics is having some serious troubles of its own right now. Krugman: "There is a real sense in which times like these are what economists are for, just as wars are what career military officers are for." So maybe Krugman is like the naval captain making cheap jokes while the submarine is under attack after all. Krugman later adds that "Economists have failed to fulfill their social function" and alludes to the idea that economics as a discipline needs new economic thinking. Perhaps there is room for amateur Austrian School economists in the discipline of economics after all.

In this light, where I read Nobel Prize-winning economist Paul Krugman suggesting the use of a fake alien invasion or humorously writing that we should use faster-than-light neutrinos to send a message to the past in order to solve the financial crisis, I cannot help but wonder to myself, "How the heck are we ever going to get out of this global economic mess?"

Now, I know that no one is asking for my opinions on possible economic solutions. After all, I do not have a doctorate degree from MIT and I am not a Princeton economics professor and I've never received a Nobel Prize in Economics; I am merely an amateur economist. Nevertheless, I think there are certain steps that could be taken for a workable solution to the global financial crisis.

1. First of all, this sort of rent-seeking, statist version of quasi-capitalism that is used in various countries (including the US) has to be worked out through the marketplace and the courts. If the world wants to rebound from the global financial crisis, this "crony capitalism" is going to have to go the way of the dodo. Governments need to learn to limit their activities to the bare essentials of governance in conjunction with the proper role of government (law enforcement, courts, and maintaining the validity of contracts). Economists may need to take another look at the Austrian School and maybe even re-read "Economics in One Lesson" by Henry Hazlitt; maybe we could send copies to the White House, Supreme Court, and Congress. Perhaps in time (to echo the words of Milton Friedman regarding Keynesians) some economist will one day in the future be able to honestly say, "We are all Austrians now"; that would be a good day. It's time for Keynesianism to take a backseat anyhow.

2. The world has to take another look at the Middle East. For whatever reason, the Middle East appears to be a viable thermometer for our planet, and we need to really work to solve issues in that region of the world. Oil is a key commodity at issue during this financial crisis, and world powers would do well in holding the Middle East accountable for the region's various issues. I am not speaking of passing blame, but helping the Middle East find workable resolution to its problems. From Israel to Iran to Saudi Arabia, the Middle East has its share of problems and if we cannot hope to resolve the problems right now, at the very least let's get everyone on the same page. At the very least, let's get people to the negotiating table.

3. The UN could take a greater role in actually holding countries responsible for their messes. There is no excuse for a lack of rebuke when Iran touts that Israel should be wiped off the face of the map. It would appear that some of these world leaders need a stark lesson in world history and economic history.

4. Nation-states need to come to terms with the grave facts of reality regarding the labor force and generational demographics. (There may actually be no solution to the unemployment problem in the US.) A great deal of our current financial issues comes from the interplay of the workforce, generational demographics, technological growth, natural resources, and the flow of finances. We need entities able to train and educate individuals with necessary skills for realistic career goals. Let the free market work out problems in the value of education. In the US, we need to get rid of these bureaucratic regulations, standards, and mandates with respect to education, health care, and the environment. If anything, the federal government should be taking a step back from things like education, health care, employment, and the environment. Further, before the financial crisis intensifies, Congress and the courts may want to address Obamacare before it completely bankrupts and shuts down the economy. Less is more.

5. Individuals need to realize that there is no such thing as a "free lunch". Individuals also need to realize that it's going to take some time for the financial crisis to end and that we need to let humanity grow up. Governments of the world need to take a step back and let humanity grow up. Governments need to foster the marketplace gingerly and not coddle and micro-manage the marketplace to the point it chokes to death. Whether we like it or not, we are all living on this planet together, and we need to realize that all of this is part of the process of humanity growing up. As of today, it would appear that humanity is in a sort of sophomoric adolescence. Nonetheless, "this too shall pass". We are going to have to wait for humanity to grow and reach a workable state of maturity on economic, political, sociological, religious, and technological levels. Yes, a period of adolescence can be rough and turbulent, but humans get through it. At this point in history, we are waiting for humanity to leave this current state of adolescence and grow up into maturity. As such, I think it would help if we put things into perspective while we dwell on this little rock hurling through space.

These are just a handful of off-the-cuff economic ideas. If you are disappointed with the aforementioned pieces of advice, I am sorry. Yes, those five comments on the world economy cannot serve as "silver bullets" to the global financial crisis. But aside from aliens arriving, I do not believe that there are going to be any silver bullets for this global financial crisis. No fake alien invasions, no time travel. In my humble opinion, we would be better off saving our energy than to be frantically looking for silver bullets. Ours is a radical global financial crisis, and radical solutions (like kibbutzim, alternative currencies, or arcologies) may be required, but that being the case, we should not be hastily and futilely searching for silver bullets that simply do not exist.

And on a personal note, let me assure you that even if one day years from now I should receive a Nobel Prize in Economics in the midst of another grave global financial crisis in the future, I will spare you all any comedy.