Paul Krugman was on a show a day or two ago claiming that regulations weren't having any effect on small businesses-- "there have been lots of studies that show that", he claimed.

Even setting aside the fact that I pretty much dismiss empiricism in the field of economics out of hand for its impracticality-- you can't use the scientific method on an economy-- and susceptibility to tampering by those with political bias, I can say categorically that these supposed "studies" are hogwash based simply on Krugman's prescriptions, which he's presumably offering based on said "studies": more regulation, more debt, and more central planning of capital is going to create economic growth?

It'd be fun to pose this scenario to him:

If you had a couple of islands with, let's say, one thousand people on each, and each of these islands had governments that only protected persons and their property from harm, theft, or abuse, would these people not engage in wealth creation-- as in, the formation of capital and consumer goods, tools, and land improvements-- and exchange good and services with each other?

Clearly when granted protection from harm or theft but otherwise left to his own devices, such behavior is the natural state of man! When left alone, men don't just sit around naked eating rocks-- they do everything in their power to survive and improve their lot!

In America this natural mode of behavior isn't happening. Rather than starting businesses, people are deciding that it's too risky. Rather than exporting their labor, people are choosing to accept a government check. If the previously described existence is natural, then this alternate mode of operation is unnatural. As in, man-made.

So what sorts of man-made things could be causing this unnatural behavior? What else could it even be if not perverted government incentives interfering in man's normal state of affairs?