Alan Greenspan is unapologetic in his defense of capitalism in a Financial Times column today (Meddle With the Market at Your Peril). He argues that history proves it is the most productive economic system, and also rejects the notion there is a trade-off between competition and equality. He says history shows the most productive economies have been able to do the most for their citizens. Without wealth creation there are no resources for government to distribute. (This brings to mind Margaret Thatcher’s well-worn phrase that socialism works until we run out of other people’s money.)

There are two ironies involved here. One is that Greenspan did much to tarnish the reputation of financial capitalism by not doing enough to contain the internet and housing bubbles. The other is that the FT, a business newspaper, sides with Barack Obama, the distributionist, and argues that free market Republicans are mostly to blame for political gridlock in America (The State of Barack Obama). Greenspan’s column is one of a series of articles in the FT about the condition of capitalism in the world today.

The Wall Street Journal reminds us, in an editorial today (The Buffett Ruse), that Barack Obama said in 2008 to Charlie Gibson of ABC News that he favored a higher tax on capital gains because it was “fair,” even though it might result in lower tax revenues and less growth. Obama is willing to sacrifice economic growth in order to advance his idea of “social justice.”

Greenspan writes:

“While central planning may no longer be a credible form of economic organization, the intellectual battle for its rival–free market capitalism–is far from won.”

Since Greenspan is such a staunch defender of Adam Smith (or Hayek) style capitalism it is fair to ask why he did not do more to protect it while he was Fed chairman. I think he answers that question when he says that we are really criticizing human nature when we attack capitalism. Greenspan may be brilliant, but he is also human. People who are brilliant tend to have a problem with humility. Greenspan probably enjoyed his reputation as a genius and was reluctant to spoil the party. His other failing is he was too rational. He professed to believe that rational people would not purposely act in ways that were self-destructive. However, since he is so rational he should have known the chief executives of the major Wall Street firms were hired hands who lacked an ownership mentality.

We cannot know for sure what is in Obama’s mind, but if we understand human nature we should be skeptical of people who claim to feel our pain. Chances are that, like most politicians, Obama is motivated by a desire for power. The way to achieve it is to build political coalitions, and the way to build coalitions is to hand out benefits to favored groups. (If we want to solidify our skepticism and realism we might want to read the works of Friedrich Nietzsche, who would have claimed even Mother Teresa was motivated by a desire to feel good about herself.)

In the years I have managed money for wealthy people I have discovered that guilt feelings are most common among people who have inherited money. It is less prevalent among people who started with little. I think that might account for Mitt Romney’s hestitancy when it comes to explaining his activities at Bain Capital. He says he became successful without using his father’s money, but it is likely his privileged background influences the way he thinks. Romney should stop saying he does not want to apologize for being successful, and instead give some specific examples of how capitalist efficiency helps America and how it compares with the inefficient and wasteful nature of government- run monopolies.

Greenspan could have pointed out that no matter how good an idea is it can turn bad if carried to excess. He once mentioned “irrational exuberance” and then seemed to forget about it. Moderation is a virtue, said Aristotle. In 1980 my investment performance was unusually good. I could not resist the temptation to make sure our chief investment officer was aware of this. My accounts were up about 80 %, while the overall market might have been up 15 %. It was because I had invested heavily in energy stocks. He sent me a note in response. It said: “Don’t overdo it.” He was right. It took nearly a decade for energy stocks to return to favor.

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The State of the Union address last night fit the usual pattern, in that Barack Obama took credit for the good things and blamed others for what is wrong in America. But, clearly our union is not getting stronger when we have to borrow $1 of every $3 we spend to keep the economy growing at a miserly 2% rate. If we keep going this way national bankruptcy is inevitable.

What is good in America today is that we are growing our oil production and have abundant supplies of natural gas. Environmentalists do not like this because it impedes the shift to higher cost alternative energy. To appease the environmental lobby Obama is blocking the Keystone pipeline and forcing Canada to look to Asia in order to sell their oil. However, Obama also sought to create the impression that the growth in domestic production is a consequence of his policies. even though he placed a moratorium on production in the Gulf and has prevented the issuance of drilling permits on federal land.

Obama is obviously sensitive to the Solyndra problem and that is why he said that hydraulic fracturing, which has allowed production of oil and gas from shale, resulted from federally funded research. Its practical application, however, was pioneered by Mitchell Energy, which is now part of Devon Energy. The comparison with Solyndra is not apt, because the fracturing technology was available to everyone in the industry, whereas Solyndra represents an attempt by government to pick individual winners. This is what is referred to as “crony capitalism.”

Obama waxed nostalgic about how good things were for American workers after World War II. This is strange, because progressives like Obama are supposed to be forward looking. We will never return to those post-war days when America was dominant in the world. The focus should be on how to adapt to a highly competitive global economy. That is why the Jobs Council argues that our education system must be revamped, so that companies will not be forced to shift operations abroad in order to hire skilled workers.

Obama claims the wealthy in America are paying too little in taxes, but it would be more accurate to say the average American is under-taxed, especially in comparison with people in Europe. Wealthy people in America pay a much higher percentage of income taxes than Europeans do. The New York Times today has a table which shows the median taxpayer in America pays only 2. 3 % in federal taxes. Even if payroll and Medicare taxes are included the rate is only 7. 4 %.The reason is Europe’s dependence on the value added tax, which is paid by everyone who shops.

Obama is forced to concentrate on income inequality because he cannot argue that America is becoming more prosperous. We are becoming poorer by the day as our debt grows and the dollar shrinks in value. It is easier for government to put people on food stamps than it is to create jobs. That is why the choice in this year’s election is between the opportunity society or the dependency society.

Last night’s Republican presidential debate once again reminded me of the similarity between politics and Wall Street. It has to do with the lack of transparency. It is difficult to tell whether we are being sold a good or bad product.

It is called packaging. The wrapping may seem attractive, but the product often turns out to be foul.

Newt Gingrich says he was paid $1. 6 million by Freddy Mac for teaching them history. He noted that the GSE’s (government sponsored enterprises) at one time were good for the housing market. That was before Jim Johnson became involved. But, Johnson convinced Bill Clinton to change the model about 15 years before Gingrich was hired as an adviser. By then, the GSE’s had been corrupted. Now we are supposed to believe Gingrich advised them to revert to the old model. The suspicion is Gingrich was brought on board to help fend off stricter regulation.

Gingrich said he helped balance the federal budget several times when he was Speaker during the 1990’s. He might have told us Ronald Reagan had something to do with this. When the Cold War ended it allowed deep cuts in the defense budget. Gingrich did not tell us how he voted on the Clinton tax increase in 1993 (he voted against it).

Gingrch said he resigned as Speaker and left the House in 1998, because Republicans lost seats in the election that year. Ron Paul interjected that when he joined the House the place was a mess and Gingrich had lost the support of his Republican colleagues.

Mitt Romney has problems of his own. He says a mandate to buy health insurance in Massachusetts is fine for that state, but it is not good for America. It is called federalism (states rights). But Romney was eager to attack Rick Perry, in an earlier debate, for allowing children of illegal aliens to go to college after graduating from high school and pay the same tuition as other Texans. That choice by the people of Texas apparently does not fit Romney’s concept of federalism.

Barack Obama is less exposed, because he does not have to engage in debates. However, his supporters says it is not fair for Gingrich to call Obama the food stamp president, even though the number of Americans receiving food stamps has increased more than 50 % during his three years in the White House.

On the other hand, Obama should take credit for the increase in America’s oil and gas production in recent years. Tom Sever and John Podesta write in the Wall Street Journal (We Don’t Need More Foreign Oil) that under Obama’s leadership we appear to be at the beginning of a domestic oil and gas boom. Therefore, we do not need to import Canadian oil. Romney, however, noted that the only reason we have an oil boom in North Dakota is that Obama has not been able to stop it because it is on private land. Obama does not like fossil fuels in any form. He is for wind and solar.

The gridlock in Washington cannot be blamed on the Constitution. People do not trust government because politicians lie too much. They also do not trust Wall Street.

The Wall Street Journal advises those who are worried about the fall election to calm down (The Gingrich Challenge). The voters must decide which Republican will challenge Obama. That is the essence of free market ideology. Only those who can compete effectively should win.

For Mitt Romney the challenge is to overcome timidity and for Newt Gingrich it is to be disciplined enough to avoid self-destruction.

Patrick Moynihan said culture was more powerful than politics. Romney’s experience in business makes it difficult for him to understand that in politics ideology matters. Hostility to capitalism is imbedded in our culture. Romney tries to adapt to that reality instead of confronting it. That annoys the Republican base.

Gingrich is an opportunist, not an ideologue, but he appeals to the base because he offers them red meat. He lambasts the media, but also attacks Romney for being a capitalist.

The elite media is a perfect target for Gingrich, because it is steeped in ideology, The New York Times today attacks Obama’s Job Council for recommending Republican ideas (Dissent in the Jobs Council). The Council wants our schools to focus on skills needed in the job market. The Times says that despite what corporations tell us we do not have a skills gap, we just have a lack of jobs. The left thinks the main purpose of our schools is to indoctrinate, so the students become left wing ideologues. It does not matter if they end up living on food stamps. It is how they vote that counts. Says the Times:

“The urgent and fundamental need, however, is to support, improve and sustain a strong public education system.”

Educators, like the trial lawyers, represent Democratic support groups that must be nourished and supported by taxpayer dollars.

In the face of such concerted cultural opposition the natural tendency of Romney is to bend. That is why he wants to eliminate capital gains taxes only for those making less than $200,000. That, he thinks, will soften his image as a greedy capitalist. What he should say is he wants to do away with capital gains taxes because he wants people to get off food stamps and live on paychecks instead. That is the language Gingrich prefers, even though he does not hesitate to attack his colleagues for their “right-wing social engineering.”

Gingrich and Romney should act as if they want to be the captain on the bridge that will prevent the ship from going under. That is what will happen to America unless we change direction. If they cannot rise to the occasion they deserve to lose. WSJ concludes the editorial by noting that the Republican establishment does not have a good record in picking nominees. Rank-and-file voters might have a clearer sense of what the country needs.

Richard McGregor writes in the Financial Times that Mitt Romney’s business experience hobbles his attempt to become president (A Perfect Presidential Profile but Somehow Lacking a Spark). This seems preposterous. We have a community organizer and Harvard professor in the White House and an effective unemployment rate of close to 20 %. It would seem that a person who has been successful in business is exactly what we need.

The elite media is a big part of the problem and it helps to explain why Mitt Romney is having so much difficulty. The so-called Republican base hates the media, but only Newt Gingrich has been able to capitalize on this. Romney is too patrician and well mannered to directly confront the media, even though the media forms a protective ring around the community organizer. As a result, the fall campaign may be a conflict between two egomaniacs, Obama and Gingrich.

The media has been working with the Obama administration to turn the campaign away from a focus on jobs and toward income inequality instead. Capitalism is associated with inequality, so we need less of it, even though it means more poverty and fewer jobs.,What makes it even more confusing is that Gingrich has joined the left’s attack on capitalism.

One problem with experience in business is that it makes it difficult to understand the extent to which the rest of society is obsessed with ideology. A person in business is conditioned to focus on what works, rather than on what constitutes an ideal society. I have often tried to engage business executives in a discussion about this. Their reaction is almost always that politics is something they cannot control, but only work around. It is not surprising, therefore, that executives at Bain Capital (Romney’s private equity firm) have given more money to Democrats than Republicans over the years. After all, a government contract can often be just as profitable as a private business deal. The objective is to earn a good return on investment, not to change society.

The irony is that business ends up being victimized by ideologues, in the media, the education field, entertainment industry, and the legal profession. A corporate executive will often say it is much better to settle out of court than to go in front of a jury, because jury members have been conditioned by society to reason that since business has deep pockets it should be forced to pay. Americans have gone to school and been told by government employees, who are also union members, that capitalists are exploiters, and this attitude is echoed in Hollywood movies and in the mainstream media.

Romney is intimidated by the cultural surroundings and he is also too polite to fight back. He sounds apologetic when he talks about his taxes and his experience at Bain. The Republican base, which is ideological, resents this and is tempted to side with Gingrich, who is a fighter. Romney needs to spend some time with Chris Christie, and learn how to counter-punch.

Bill Clinton’s contribution to the Financial Times’ series on capitalism is a big disappointment (Charity Needs Capitalism to Solve the World’s Problems). He says business can engage in charitable activities and also put people back to work. A partnership between business, charities, and government is needed “so that benefits and opportunities are available to more people.”

In “Reckless Endangerment” Gretchen Morgensen argued that it was Bill Clinton’s creation of a public- private partnership to expand home ownership that contributed to the financial crisis. In both America and Europe government spending ‘to bring benefits and opportunities to people”have led to unsustainable debt levels and the threat of financial collapse. What is needed is a return to first principles. Government must get out of the way so that individual entrepreneurs can focus on innovation and wealth creation. Without wealth creation there is no money for charities or government’ benefits.”

Clinton says that while our global economic system has brought benefits to many, “it has also exacerbated inequalities, both within and among countries.” This directly contradicts what Phillip Stephens wrote earlier this week about how capitalism in Asia has led people to look to the future with optimism. In places such as China and India millions have moved away from poverty and are enjoying rising standards of living.

Clinton shares the opinion of those on the left that business should support national goals set by politicians, and abandon the practice of maximizing profits by serving consumers. One problem with this is that in a democracy political goals are always changing. Moreover, the profit motive must be preserved because it is the mechanism that directs capital into the areas where it is most needed. It is the invisible hand of the free market that is supposed to correct distortions that develop in the economy.

The Keystone XL pipeline is a good example of how politicians and bureaucrats create obstacles to prosperity and jobs. The New York Times writes that Barack Obama made the correct decision when he rejected the pipeline that would run from Canada to the Gulf Coast (A Good Call on the Pipeline). The Times writes:

“Far more important to the nation’s energy and environmental future is the development of renewable and alternative energy sources.”

In other words, the development of fossil fuels must be impeded because the national goal should be to promote wind and solar power.

The Times says the “extraction and production of tar sands oil in the fields of northern Alberta would also cause far more greenhouse gas emissions than drilling for conventional crude.”

The Times also says that proponents are wrong when they say Canadian oil would reduce our dependence on Middle Eastern oil, because much of the pipeline oil would be refined on the Gulf Coast and sold into foreign markets.

When economic decisions are based on political considerations the free enterprise system is prevented from earning a profit by serving consumers. Obama is blocking the pipeline because he has concluded he is not likely to win in the industrial states of the Mid-West, and his chances are better among upscale voters in places such as Virginia and North Carolina.

Rejection of the pipeline will force Canada to try to sell its oil in Asia instead. It will not prevent development of the oil sands. It will mean America will continue to be dependent on oil from the hostile regime in Venezuela. Even if some of the oil was refined on the Gulf Coast and sold abroad it would be a profitable economic activity and mean jobs for American workers The pipeline decision will actually harm the environment because shipping the oil across the Pacific will result in increased emissions. The only “benefit” is that Obama might win in Virginia and North Carolina.

Another egregious example of how government interference with business hinders prosperity and hurts the consumer is the Obama administration’s attempt to prevent Boeing from manufacturing planes in South Carolina, where workers are not forced to join unions. Boeing eventually settled with the unions in Washington, but only after promising that a certain number of jobs will be reserved for that state.

The Financial Times is running a series of articles about capitalism. The premise seems to be that the financial crisis has damaged capitalism, and we must find ways to refurbish the idea.

The most recent article (by Philip Stephens) strikes me as being not so much about capitalism as it is about the crisis that government faces in the developed nations (Leaders Who Generate Diminishing Returns). Stephens says governments are too weak to deal with the forces of global capitalism. Leaders cannot give voters what they want because market forces are too powerful. Stephens writes:

“The danger is that what started out as a crisis of financial capitalism will give way to a new age of nationalisms–a backlash against globalization and a return to zero-sum politics.”

Capitalism is the best system because it rewards both consumers and producers. Consumers have a wide range of choice and producers are rewarded for their efforts. The side-effects are inequality and instability.. The most talented get rewarded most and those who cannot compete are punished. Competition is an essential requirement, and the price mechanism acts to direct resources to the areas where they are most needed.

Democracy is the best idea for organizing society because in its regulated form (constitutional) it prevents power from becoming concentrated and it can adapt to changing circumstances. Its biggest challenge is to deal with the desire of voters for both freedom and security. Problems occur when there is lack of balance between these demands.

Stephens says capitalism works well in Asia and the sense of political powerlessness is “a western rather than a global phenomenon.” Most Asians feel good about their situation today and look to the future with optimism. Americans and Europeans have discovered that capitalism no longer belongs to the west.

So, Europeans should take pride that capitalism and democracy are universal ideals that were discovered in Europe and are now spreading throughout the world. What the developed nations must do is restore their ability to compete with the emerging nations. That means becoming more efficient, and the best way to do that is to reduce the size of government. We need more entrepreneurs and fewer bureaucrats.

The biggest obstacle to overcome has to do with the tendency to deny reality. Those who would like to have government become even bigger pretend to believe that the financial crisis has something to do with capitalism, when in reality it was based on the belief that everyone is entitled to own a home. When the entitlement mentality takes hold in China America could become competitive again. Some day in the future Chinese capitalists might want build factories in America to take advantage of our low labor costs.

If you Google “Obama and the Warren Court” you will see a comment that Obama did not actually say the Warren Court was not radical enough. You will also discover that it is mostly a question of semantics.

Obama said in the 2001 radio interview the Warren court was not “that radical.” It did not break free of the constraints the founders had put in the Constitution. What he means is the protection of private property. The founders believed property was an inalienable right, just like freedom of speech and freedom of religion.

Obama said the civil rights movement relied too much on the courts. They should have paid more attention to the political system, by which he means try to pass laws to redistribute private property. But, he also suggests the Supreme Court could have interpreted the Constitution in such a way as to overcome the restrictions it contained. He refers to the property protection as “negative liberty.”

Until passage of the 16th amendment in 1913 there could be no direct taxes imposed. The income tax is a direct tax. The only taxes allowed were tariffs and sales taxes on things like liquor. Sales taxes were allowed under the Constitution because everybody paid the same tax. An income tax was considered theft of property by the government.

Obama said the emphasis should be on what the government can do, not what it can’t do (this is considered positive liberty). The idea is that just because you are free to pursue happiness it does not mean you are able to pursue happiness. The civil rights laws allowed blacks to sit at the lunch counter alongside whites. But, it did not help unless they had money to spend. So, to be really free poor black people had to get spending money from the government. (Incidentally, Jefferson took John Locke’s “life, liberty, and property” and substituted pursuit of happiness for property in the Declaration. I suppose he thought it sounded more egalitarian.)

Obama would like the courts to focus on positive freedom and interpret the constitution in such a way that it is not necessary to go through the complicated amendment process. That is why he says judges must have empathy. It is not what the law says that matters, it is how it affects people. The Warren court was not radical because it refused to read between the lines. It lacked empathy.

Will the Supreme Court read between the lines and authorize Obamacare because eating broccoli is good for our health?. Positive freedom means what we would do on our own, if we were as smart as the elites.

David Brooks wrote that leaders tend to perform best when they are humble. To some, this seems counter-intuitive, because in order to be successful at something we must think we are capable of getting the job done. Jim Collins, in his book about management (Good to Great), came to the same conclusion as Brooks. He said great leaders have two things in common: humility and an iron will.

It is often the case that children of successful parents fail to match the achievements of their mothers or fathers. Usually, the explanation is the parents were too demanding and the children grew up feeling they could never live up to the lofty expectations. In his autobiography Thomas Watson Jr. wrote about the transformative experience in his life, which came when he left the Air Force. His commanding general, Hap Arnold, said: “I guess you will go on to become CEO of IBM.” Watson said until then he had never thought about this prospect. But, he had so much respect for Arnold that he reasoned: ‘If he thinks I can do it, maybe I can.’ Talking about his father (Thomas Watson,Sr.) he said “he covered me like a wet blanket.” When he was 13 years old he suffered from clinical depression.

The junior Watson did end up running IBM and he was the one who brought the company into the computer business.

The reason humility is so important for success is that we must be capable of assessing our strengths and weaknesses. When Barack Obama entered the White House he was often compared with Abraham Lincoln, who had filled his cabinet with people who had been his political enemies. Doris Kearns had written a bestseller about this (Team of Rivals). Obama had allegedly shown the same self-assurance when he surrounded himself with strong-willed individuals, such as Larry Summers, Paul Volcker, and Rahm Emanuel.

Most of Obama’s original team is now gone. Matthew Continetti writes in the Weekly Standard (The Worst White House Aide) that the “revivalists” have defeated the’survivalists.’Obama has retreated into the inner circle, which consists of those he feels he can really trust. The one who Continetti calls the worst adviser is Valerie Jarrett. She is the one who wanted Obama to go to Copenhagen to try to get the International Olympic Committee to choose Chicago for the 2016 Olympics (they chose Rio instead). She is the one who hired Van Jones, the environmentalist, who was later fired, in part because he was a 2001 “truther.”

Revivalists want Obama to be true to his convictions, whereas survivalists wanted him to succeed in politics through compromise. Emanuel, for example, advised against shutting down Guantanamo and pushing ahead with Obamacare.

Continetti writes that Jarrettt has stated she bonded with Obama because they both spent time abroad when they were children (she in Iran and he in Indonesia). That experience made them look at America from a different perspective. America is one of many countries, not the center of the universe.

Continetti suspects the bond exists also because Jarrett tells Obama what he wants to hear. She says Obama is always bored because he is so much more talented than the ordinary person. He presumably was never happy is his previous jobs because they were too small for him. What can he do now that he is president of the United States? Is he still hoping for a bigger job?

In any event, Obama does not seem to derive much satisfaction from governing America. It is too frustrating and messy. Campaigning provides the opportunity to tell a cleaner story. The solution to America’s problems is income equality.

Mitt Romney should be happy that he is being attacked for his performance at Bain Capital, because it offers the opportunity to have a dialogue about where America is going. If we really believe free market capitalism is superior to central planning we should appreciate the chance to engage our opponents in debate.

At the conference I just attended Synopsis said innovation is always good. Once we build a new chip that concentrates more functions on a smaller space we are never going back to the inferior product. This kind of linear progress is not possible in human society because there are limits imposed by human nature. That is why Francis Fukuyama said, after the collapse of the Soviet Union, that we had reached the end of history. Once we discovered representative democracy and capitalism we have hit the wall. While both ideas have flaws we will not find anything that is better. The reason is these ideas best suit the way we are.

Our opponents in the 2012 election favor central planning and collective action over individual action. They think people are incapable of free choice. Decisions should be made by experts on behalf of the people. The problem is it means the loss of individual initiative which is necessary for progress. If all societies were collectivist it might work for a while. But, as Ronald Reagan used to tell us, a free society will always outperform a slave society.

The first advantage of a free market is that it gives people a choice. If demand for potatoes goes up because people prefer them over carrots the price of potatoes will rise and farmers will plant more potatoes the next growing season. A central planner’s first instinct is to impose price controls on potatoes so that farmers will no longer exploit consumers.

Paul Krugman argues in the New York Times (America Isn’t a Corporation) that Mitt Romney’s experience in business means he would not be a good president because corporations believe in “ruthless cost-cutting” which benefits the bottom line at the cost of jobs. Krugman says that when Barack Obama bailed out the auto industry he did it to save jobs, not to save the business. That brings us to the second advantage the free market has over government. Government does not think in terms of the bottom line because it has the ability to tax. Business must be efficient or it will not survive. If the auto industry does not become efficient will taxpayers once again be required to put up the money for anther bailout?

When the focus is on job security it is easy to understand why collectivists have a negative view of innovation. Obama once said the ATM is responsible for much of the joblessness in America. When the ATM became available banks let most of their tellers go. Free market advocates have a more positive attitude toward innovation. It allows productivity to increase and the standard of living to rise, because only more output per worker can justify pay increases.

While collectivists accuse business of exploiting workers by not increasing wages fast enough they have no compunctions about forcing taxpayers to pay for inferior government services. Again, job security is the culprit. The mayor of New York City wants to fire 1500 teachers who are not performing well, but is up against teachers unions who think even bad teachers are entitled to safe jobs.

Krugman shows that he does not understand how business works when he says cost cutting is always good for the bottom line. He writes:

“From the point of view of the firm’s owners (though not its workers), the more costs that are cut, the better. Any dollars taken off the cost side of the balance sheet are added to the bottom line.”

What Krugman says is not correct because business is always worried about competition. A public school system can survive even if the teachers are incompetent because children are forced to attend the schools. If a corporation cuts costs for research a competitor is likely to come along with a better product. A company or industry that cannot compete will not be able to provide job security for its workers, and the owners will not earn any profits.

A columnist recently wrote that Mitt Romney is a bad capitalist because some of Bain’s businesses laid off workers, whereas Steve Jobs was a good capitalist because he produced jobs. That, of course, is ridiculous because when consumers shifted to the iPhone they stopped buying other products and some people lost their jobs.

Krugman says a corporation cannot be compared with government because corporations do not care about jobs but government does (or should). He writes:

“But the story is very different when government slashes spending..Look at Greece, Spain, and Ireland..In each case, unemployment soared, because cuts in government spending mainly hit domestic producers.”

Collectivists like to say “we are all in this together.” The problem is Greece does not have any money to spend and they cannot borrow. The solution is therefore for Germany to spend more, because that will pull in more imports from Greece. A central planner will argue that Germans must learn to like olives because that will save not only Greece but the entire eurozone.