This is barely worth blogging about, since I know exactly what Krugman’s apologists will say, but what the heck? I love it when Landsburg criticizes Krugman, so this post is for his psychic enjoyment…
In a March 28 post, Krugman wrote: “Back in the Reagan years two unprecedented things began happening to the US economy. For the first time ever, we began running large peacetime budget deficits; and for the first time ever we began running large trade deficits.”
OK, so mark that down: Whatever the budget deficits were in the Reagan era, Krugman is saying they were (a) unprecedented (for peacetime) and (b) “large.”
Now, I am not even going to bother finding quotes to back this up, but I hope no one will challenge me when I say that Krugman has referred to Herbert Hoover’s ill-fated presidency as an example of fiscal austerity, the kind of tight-fisted budgeting that we want to avoid.
In that context, it is interesting to look at the budget deficits (as a share of GDP) of Hoover vs. Reagan. This compilation, in my opinion, is one-year off in their apportionment of presidential responsibility in the 1930s (because of differences in when presidents were sworn in and when the fiscal year began). So note I am actually hurting my case, by taking (what they claim is) Hoover’s biggest deficit and giving it to FDR. Anyway, here’s how I assign the fiscal year deficits:
Hoover FY 1930 Surplus 0.8% GDP
Hoover FY 1931 Deficit 0.6% GDP
Hoover FY 1932 Deficit 4.0% GDP
Hoover FY 1933 Deficit 4.5% GDP
Reagan FY 1982 Deficit 4.0% GDP
Reagan FY 1983 Deficit 6.0% GDP
Reagan FY 1984 Deficit 4.8% GDP
Reagan FY 1985 Deficit 5.1% GDP
Reagan FY 1986 Deficit 5.0% GDP
Reagan FY 1987 Deficit 3.2% GDP
Reagan FY 1988 Deficit 3.1% GDP
Reagan FY 1989 Deficit 2.8% GDP
Note that Hoover’s final year–the one suffering the brunt of Krugman’s ire, when Hoover tried to balance the budget through massive tax hikes and (very modest) spending cuts–the budget deficit as a share of the economy was higher than in 4 out of Reagan’s 8 years.
Like I said, I know full well what the response is going to be: “Bob you moron, can you possibly be this ignorant, after you’ve read Krugman for this many years? The economy was still awful in 1933, so obviously Hoover was running woefully inadequate deficits. In contrast, Reagan’s deficits were unjustified given the conditions in the economy. Contrary to popular belief, Krugman isn’t always for deficits; he’s for them, but only when the situation demands it.”
Great, I get it. My point is, it is extremely unhelpful to a debate over economic policy when comparable fiscal records can simultaneously be described as monstrous austerity versus unprecedentedly large deficits.
This is a similar beef I have with Scott Sumner. If he said, “Yes, Bernanke has engaged in unbelievably loose monetary policy, but I think conditions require that it be even looser still,” then fine let’s talk. Yet when he defines tightness or looseness in a way that crucially depends on his policy proposals being right–the very thing under discussion, after all–then it’s almost impossible to have a rational discussion. It would be like physicians arguing over whether a patient needed a higher dosage of a certain drug, and quantifying the units of the dosage on the basis of the patient’s symptoms (as opposed to the volume of liquid that had been injected so far).