Space Alien Stimulus and Keynes

Krugman won a Nobel Prize in economics. A real one. Much more below the jump.

I think that Krugman is just so upset that the country is starting to reject his ideas, it's just easier to fantasize about space aliens than to accept reality. He's seriously gone off the deep end. But what I want to focus on is the exchange that Rogoff has with Zakaria before Krugman goes all "Falling Skies" on us. It's this idea that Zakaria employs of paying people to dig ditches and fill them up again:

KENNETH ROGOFF, PROFESSOR OF ECONOMICS, HARVARD UNIVERSITY: Infrastructure spending, if it were well-spent, that's great. I'm all for that. I'd borrow for that, assuming we're not paying Boston Big Dig kind of prices for the infrastructure.

FAREED ZAKARIA, HOST: But even if you were, wouldn't John Maynard Keynes say that if you could employ people to dig a ditch and then fill it up again, that's fine, they're being productively employed, they'd pay taxes, so maybe Boston's Big Dig was just fine after all.

What part of paying people to dig ditches and fill them back up is "productively employed"? Isn't that the opposite of "productively employed"? If you worked all day and had nothing to show for it at the end of the day, what have you contributed to society? Why not just cut out all the sweat and labor and just give the ditch digger/filler a paycheck? What's the difference? This line of thought must be why liberals are in favor of massive unemployment payments ad infinitum. Also, if I pay you $10 to dig a ditch and fill it up again, and you pay me $2 in taxes, what have I earned as the government? I took money away from someone who did something productive and gave $8 to a guy who didn't do anything productive. This is so stupid it makes me want to dig a ditch, put Zakaria in there, and fill it up again. That might be productive.

The problem with the Stimulus is that we didn't actually create anything. Not. One. Thing. The stimulus was a government bailout to states and local municipalities to keep the government workers from having to experience the job losses and layoffs that the private sector experienced. If you have a picture of something useful that was actually created by stimulus money, e-mail it to me, and I'll reconsider. The problem is, we didn't actually improve our infrastructure, or do anything remotely productive. We just kept some government workers employed and kept the true unemployment number artificially low. That's right, 9.1% is artificially low.

Think about the exchange above. Rogoff is simply saying, "Hey, I think improving infrastructure is great, but only if it's a good deal". Zakaria's response is "Overspending can never be bad". That's just idiotic. Every tax dollar the government gets to "spend" is earned by some person who actually contributes to society and makes it better. Before Zakaria just blows my tax money by paying 100 people a million dollars each to dig a hole and fill it up, I'd rather have Krugman's aliens attack us. 

[H/T to NewsBusters for the video]