Paul Krugman: "No Correlation" between regulation and job creation

Nobel Prize winner Paul Krugman showed again why he needs to stick to trade theory Sunday, when he asserted that government regulations on business have no impact on job creation.

Krugman is probably knowingly lying, but for him, promoting demand-side economics is a worthy end. After all, he has staked his entire reputation on it as the eminent liberal economist today.

The fact is, contra Krugman, simply looking at the total sales figures does not paint a full picture of the economy. Thousands of regulations pile up on top of each other each year, compounding on the federal, state, and municipal levels of government. Regulations inherently invite costs as businesses are forced to change their business model. These costs result in less production, less employment and incomes, and of course what Krugman sees in less sales.

Regulations in and of themselves do not fully explain less sales; monetary, fiscal, tax, and trade policy must also be factored in. But to say it does not contribute is a fantasy.

Here is the transcript from Krugman's exchange with Greta Van Susteren on This Week:

GRETA VAN SUSTEREN: And you talk about the Main Street, is that we're strangling small businesses. I mean everyone, no is paying much attention to these small businesses. The regulations start strangling them, some are laughable and silly, but they have profound impact on the job creators, those who are making jobs. They can't afford to hire people.

PAUL KRUGMAN: There's been, there's been tons of work on this. And what's holding small business back is not regulations, it's the fact that they don't have sales.

VAN SUSTEREN: It's not all, it's some of it.

KRUGMAN: There's not, there's no correlation looking across, which parts of the economy do small businesses complain about regulations? Which don't they? There's no correlation between that and actual job --

GEORGE STEPHANOPOULOS: Let me ask Paul a question and then I'll bring you in. I just want to ask you one question. Is the one exception to that perhaps on health care? Where firms that are greater than 50 people have to pay more. Don't you see some firms cutting off at 49?

KRUGMAN: There might be, but you can't see that in the numbers. And the overwhelming fact of the matter --

VAN SUSTEREN: Well you talk to them. Instead of looking at just numbers, why don't you sit down and talk to them. And if you actually talk to these people, and you go and talk, a lot of them are struggling with this. They don't understand a lot of things that happened to them, they don't understand a lot of things that happened in Washington.

They're very cautious because they see a real dismal economy out there, and that does have an impact.

KRUGMAN: I have talked to them, that's not what they say --