Paul Krugman Proves He Doesn't Understand Scarcity

Paul Krugman is no beginner when it comes to economic fallacies.  From calling for a Federal Reserve-engineered housing bubble to bring the U.S. out of the dot-com recession to actually declaring that there is a free lunch to be enjoyed with money-printing, the Keynesian bulldog has proven himself totally ignorant of the concept of scarcity.

Scarcity, of course, is the sole reason why men economize and produce.  It is the means to achieve food, water, shelter, and all other goods which allow the species to survive.  If there is no scarcity, there is no market economy.  Scarcity implies opportunity costs, as nothing comes without a cost in terms of time and quantity.  Purchasing an ice cream cone on a hot day means that money spent can't be sued for anything else.  Going for a drive on a Friday afternoon means that time spent driving can't be spent enjoying other activities.

Scarcity is a simple concept with broad implications.  When a Nobel Prize-winning economist appears incapable of understanding it, one must question the true intent of his writing.

There are examples abound in his recent New York Times column "Broccoli and Bad Faith."  With the Supreme Court hearing arguments over the constitutionality of President Obama's keystone health care law, Krugman is worried that the high court may strike down the bill over its breaching of Constitutional authority by mandating U.S. citizens purchase health insurance.

Here is a little advice for Paul: if you worried that the Supreme Court will do its job and actually uphold the Constitution, you have nothing to fret about.  The Court declared no law unconstitutional from 1937 to 1995 -- all the way through Lyndon Johnson's Great Society.  It has long given up caring about the Constitution, as it plays enabler to Leviathan's growth.

But being a big-government cheerleader, Krugman has no qualms about whether the law is Constitutional or not.  His only worry is the downtrodden being incapable of making their own decisions.  He writes:

Removing the mandate would make the law much less workable, while striking down the whole thing would mean denying health coverage to 30 million or more Americans.

Striking down the law denies coverage?  In non-Orwellian terms, what Krugman means to say is that by not forcing individuals to purchase health insurance, they are denied such coverage.  To understand this claim, just apply Krugman's logic to any economic sphere.  Say the government could force everyone to buy food under penalty of imprisonment or death in order to cease starvation.  Regardless of the kinds of unintended consequences that would follow such legislation, Krugman could then argue that abolishing such a measure would deny millions from having a full stomach.

It's funny how reasoning works when applied to its full extent.

Krugman proceeds to try to differentiate between broccoli as a good and health insurance as some type of otherworldly service:

Let's start with the already famous exchange in which Justice Antonin Scalia compared the purchase of health insurance to the purchase of broccoli, with the implication that if the government can compel you to do the former, it can also compel you to do the latter. That comparison horrified health care experts all across America because health insurance is nothing like broccoli.

Why? When people choose not to buy broccoli, they don't make broccoli unavailable to those who want it. But when people don't buy health insurance until they get sick -- which is what happens in the absence of a mandate -- the resulting worsening of the risk pool makes insurance more expensive, and often unaffordable, for those who remain. As a result, unregulated health insurance basically doesn't work, and never has.

Pay attention to what Krugman is saying here.  When someone buys broccoli from his local grocer, he in no way prevents others from buying broccoli.  To believe this, one would also have to believe that broccoli is then in itself not scarce.  After all, if Krugman's argument were true, you and I could both walk into the same grocery store, proceed to the produce section where broccoli is available and purchase the exact same piece of the vegetable at the same time.  Only under that scenario would my purchasing broccoli not make it unavailable to you.  Such is a fantasy ideal, and only possible in the utopia known as the Garden of Eden, where scarcity is nonexistent.

Broccoli, like all consumer goods, requires time, land, labor, and capital to produce.  It does not fall from the sky.  Farmers who grow broccoli can't in turn use their land to grow other produce.  They can't invest their time in other endeavors.  The whole market process is based on this state of affairs, where producers are sent signals via consumers by the pricing system so that investment goes into those industries or goods in high demand.  This signaling process is necessary because of scarcity.  It guides producers toward the most efficient use of resources.

Even an individual mandate for people to buy health insurance doesn't fix this problem.  My getting treatment by a doctor means that same doctor is unavailable to offer treatment to you.  However, this doesn't validate Marxism, which holds that a market economy is a struggle between exploiters and saps.  The market ensures that those who need goods and services most urgently are able to get them through the pricing process and through bidding up the purchasing price.  It is a peaceful process as long as private property rights are recognized and upheld.  Consumers are free to pay what they will for goods and services, while producers are free to accept the price at their given preference level.

The absence of an uninhibited market is the true disease that plagues the health care industry.  Krugman can't admit this, as it flies in the face of his pro-government and devoutly Keynesian ideology.

The individual mandate is ultimately a coercive measure which distorts the harmony of the market process.  Try as he might, Krugman can't argue away scarcity with scare-mongering and illogical examples involving free broccoli for all.

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