DOGE Is Not the Problem

Cutting waste, fraud, and theft is "bad for the economy"?

With all the hysteria on both sides around the new administration, and in particular, Elon Musk’s work with DOGE, it’s time for a basic economics refresher. Here’s a sampling of the type of comments I’m seeing from the anti-DOGE agitators.

Trump's tariff war and Muskrat's DOGE coup are either economic self-mutilation or intentional efforts to crash the economy and dismantle the US Government. Either everyone in the WH is deeply unwell, or deeply short the market.

When citizens realise that all the ideological cuts & govt depts shut that doge make won't save money because all that spending was someone else's wage who went on & spent it on goods & services US is going to face a MAJOR SHOCK negative multiplier effect Every $ cut many $ lost

Ironic how yall let the tariffs and DOGE cuts increase prices, crash the economy, and have all our allies cutting ties, but bc a billionaire told u it benefits u despite all evidence, u believe it

Danny Moses, the trader who predicted the 2008 market crash portrayed in 'The Big Short' , warns markets underestimate DOGE's $115B spending cuts. Federal job losses could trigger an 'unvirtuous cycle,' hurting small businesses and the economy possibly leading to another Crash

DOGE is dumping civil servants into a weak job market. Maybe you don't feel bad for them. But rising unemployment will ripple across the economy in a way that will be felt by many voters, and therefore eventually by many politicians.

…the country is almost certainly heading toward a severe economic contraction due to mass layoffs in government jobs and abrupt federal contract cancellations.” And if you wasn’t thinking about the 2nd order consequences of DOGE, well then…

It was bound to happen. Today a couple declined to sign for a kitchen remodel we bid on bc he is worried about his government job. It was a tiny project. Not a big deal on my end. But, it's a perfect example of the broader economic damage DOGE is causing. Somewhere cabinet, counter, appliance, lighting, hardware and plumbing companies all lost a sale they didn't know they had yet. The RE market lost some value, and the county lost some tax revenue. You get the idea. This will be happening across the country. Every aspect of our economy will be affected, and we haven't even seen the effect of the tariff yo-yo bullshit. Trump is a moron.

Sounds like a pretty bleak situation, right? And it even seems to make sense on the surface. Cut a bunch of government jobs and federal contracts, shut off a flow of money into the economy, more people are unemployed, businesses make less income, they lay off private sector workers, and everything just spirals downhill from there.

If we stop at the surface level of analysis, that all sounds logical. So let’s take it a step further. What’s the logical foundation of modern economic analysis that produces these predictions? It’s all Keynesian economics. And what did Keynes say?

If the Treasury were to fill old bottles with bank-notes, bury them at suitable depths in disused coal-mines which are then filled up to the surface with town rubbish, and leave it to private enterprise on well-tried principles of laissez-faire to dig the notes up again (the right to do so being obtained, of course, by tendering for leases of the note-bearing territory), there need be no more unemployment and, with the help of repercussions, the real income of the community, and its capital wealth, would probably become a good deal greater than it actually is.

John Maynard Keynes

So there you have one of the fundamental Keynesian principles described by practical illustration. According to this theory, the government could bury jars of cash in a landfill, charge companies for the privilege of digging it up, and this would get rid of unemployment and make everyone richer.

If your first thought on reading this is “that’s the most retarded idea I’ve ever heard in my life,” congratulations, you win the dubious distinction of having more common sense than the majority of economics degree recipients. Which basically means you’ve actually done productive work at some point in your life, and can tie your own shoes unassisted, an unachievably high bar for the average Paul Krugman disciple.

Although common sense immediately sniffs out the bullshit in this theory, let’s actually go a level deeper and understand why it’s wrong. Because all the disparaging DOGE quotes at the beginning of the article are based on the exact same faulty logic, but they sound much more reasonable at first blush. So we’ll need to get a firm understanding of the underlying error in order to critique the flaws of the anti-DOGE doomerism.

Money is not Wealth

The underlying error, in my opinion, is the same one underlying so much of the deception and confusion around money and economics: money is not the same thing as wealth.

I wrote a whole article on the topic, so I’m not going to rehash it here. If the concept sounds crazy to you, I challenge you to read the article before you dismiss it out of hand.

What makes the “cash in a landfill” idea so transparently ridiculous to anyone with real world work experience? There are obviously productive scenarios where valuable materials are dug out of the earth, creating jobs and making everyone richer. We call that mining. The landfill example is ridiculous because for one thing, burying something valuable only to turn around and dig it back up is clearly unproductive and wasteful. No coal miner has ever thought “You know how we could really improve this operation? We should start hauling trainloads of coal back to the mines, dumping it down the shafts, and then digging it out all over again. Think of how many jobs we could create!” Any coal miner voicing such brainrot would get a quick ride on the short bus to the local looney bin. But when a 22 year old college student submits a thesis with an equally ridiculous premise, we reward him with a degree and probably a Nobel Peace Prize for good measure.

It’s also ridiculous because the cash in those jars isn’t actual wealth, it’s just claims on existing wealth. Burying cash doesn’t create any more valuable goods or services. Neither does digging it up.

Where does the cash come from? Taxes? That means a citizen went out and worked to create some valuable goods or services, got paid to do so, and then the government confiscated a portion of those earnings at gunpoint to bury in a landfill. The whole landfill charade has no impact whatsoever on the actual goods and services in the economy. It only transfers the claim to those goods and services (the money representing that claim) from the productive citizen to some random landfill “miner.”

If the cash doesn’t come from taxes, maybe it was printed or borrowed into existence. In that case, the claims on wealth are confiscated indirectly from productive citizens by the devaluation of their savings and income through inflation. Either way, the effect is the same. No new wealth is created, claims on wealth are only redistributed from the productive to the unproductive.

What is DOGE Cutting?

So with all that in mind, how does this relate to DOGE? What are they cutting?

As far as I can tell, the cuts are focused on waste, fraud, and theft. Waste is a lot of payments to employees who aren’t needed to get the job done, and to programs and organizations providing services that no one would pay for in the free market because they aren’t valuable enough. Fraud and theft cover a wide range of things, but all cases where money is being spent with nothing valuable received in return. So in our landfill analogy, this is all landfill money. The only difference is whether the recipients are “working” to dig it out (wasteful make-work government jobs and grants to unproductive or anti-productive organizations and NGOs) or whether the cash is handed to them directly without the burying and digging up charade (fraudulent benefits payments and kickbacks to corrupt politicians).

The US is $36 trillion in debt and running multi-trillion dollar deficits every year, so every penny of this money is a wealth transfer from productive Americans paid for by inflation. Productive American citizens work to produce valuable goods and services, and then a portion of the value of their claims on those goods and services is transferred to useless bureaucrats, overpaid federal contractors, scammers, and corrupt politicians. None of these people are contributing any valuable goods and services to the economy, but they are living the high life on the backs of hard-working, productive Americans.

Is Economics Even Real?

What happens when DOGE cuts off funding to this waste, fraud, and theft? Will it really crash the economy?

Of course some people will lose jobs, and revenue to some businesses will fall as a result. Some people will be forced to sell real estate, and real estate price will fall as a result. Same is likely with stocks.

The second order effects are likely to cause some economic indicators to fall. The GDP might go down, the stock market might fall, the price of houses might fall, unemployment might rise.

Does any of this actually mean the economy is taking a hit?

In my opinion, absolutely not. It just means our economic indicators are faulty, and don’t reflect reality. That’s a whole other conversation that could be its own article, so I won’t get into it right now. But just one example to illustrate.

Suppose there’s a government employee “working” from home at an absolutely non-productive job. Nobody benefits from their “work”, no goods or services are created as a result. But they have a “job” where money taken from productive Americans is transferred to them at the rate of $150k per year. What do you call it when the government pays someone to do nothing? That’s called welfare. Suppose DOGE fires this person, and they go collect unemployment and food stamps. Now the unemployment rate goes up by one, and the number of people on welfare goes up by one. Does this mean the economy is somehow worse? I don’t believe so, because nothing about the actual economy has fundamentally changed. That person was collecting welfare all along, it was just labeled a “job” and counted in the GDP, instead of being correctly labeled as welfare and the person counted as an unemployed welfare recipient.

You can do the same exercise with every economic indicator. Remember, the indicators are all created by people who believe money is wealth, and therefore believe you can improve the economy by burying it and letting people dig it up. Don’t let them gaslight you with their word-salad rhetoric and fancy degrees.

In reality, cutting waste, fraud, and theft means productive Americans get to keep more of the wealth they create. Every dollar cut from wasteful government spending is a dollar of purchasing power that stays in the pocket of a productive American. The goods and services available in the real economy do not change, the only thing that changes is who has the purchasing power to buy those goods and services.

Gaslighting Parasites

An organism that survives by sucking resources out of a living host is called a parasite. Economically, a parasite is someone who survives, not off the free market value they provide to society, but off the resources they manage to extract from those who do create that value.

What do you call it when someone works to create things of value, and then transfers that value to someone else, who has done nothing productive to earn it? If the transfer is voluntary, we call it charity. If it’s involuntary, we call it slavery.

What do you call it when the slavemasters who are living large off their coercively obtained income claim the moral high ground, and accuse the slaves of ruining everything by objecting to their continued enslavement? I’d call it a great example of gaslighting by a particularly shameless class of parasites.

A parasite cleanse can certainly have some nasty short-term effects. But anyone arguing that DOGE cutting waste, fraud and theft is bad because “think of the poor economy!” is gaslighting you. Don’t fall for it. Real economics is not the twilight zone. Money is not wealth. Waste is bad. Fraud is bad. Theft is bad. And Paul Krugman is, as always, hilariously wrong.