(Note for new readers: If this post seems obscure and petty, you must not have been around when this happened.)
Back in February 2009, the new Obama Administration put out an economic outlook that forecast real GDP in 2013 would be 15.6% above the 2008 level. Greg Mankiw was quite skeptical of this forecast, thinking the Administration’s projections were far too optimistic, and brought up what professional economists describe as the “unit root hypothesis” (an econometrics term).
Paul Krugman responded with a blog post titled “Roots of Evil” (obviously combining “unit root” with “the root of all evil”–ha ha that guy’s such a joker), in which he accused Mankiw of “more than a bit of deliberate obtuseness” in Mankiw’s apparent misunderstanding of the nature of the economic slump facing the nation in 2009. Now Krugman’s accusation was totally bogus, since Mankiw in his original post (let alone if one read his actual academic work on the topic) made quite clear that the issue was that we didn’t know when unemployment would return to normal; nobody doubted that there would be strong economic growth if (and when!) millions of people suddenly returned to work. Yet despite misconstruing Mankiw, Krugman–as often happens–was sly enough to make it look like he was merely objecting to the reasons Mankiw gave for doubting the growth forecast; Krugman didn’t actually go on record as saying he believed the forecast. (Furthermore, Krugman was smart enough to ignore Mankiw’s follow-up offer of a bet.)
The same escape hatch is not available to Brad DeLong. In response to Mankiw’s criticism of the Administration forecast, DeLong wrote a post that began with “Sigh.” (italics are DeLong’s) to show how frustrating it was to deal with such idiocy. DeLong explains that because the 2009 economy was depressed due to high unemployment, we could expect higher than average economic growth as the unemployment rate quickly fell over the next two years (during which half of the above-natural unemployment should be erased). Then DeLong–like Krugman–acknowledges that Mankiw knows all of this, and ends his post this way:
There’s no wiggle room there; DeLong is saying in March 2009 that the people who understand the nature of the recession should bet with the Obama Council of Economic Advisers that real GDP in 2013 will be 15.6% above the 2008 level, and ignore Mankiw’s warning that sometimes recessions linger on and on and on.
So how did things turn out? Scott Sumner reports that “the actual 5 year RGDP growth just came in at slightly under 6.3%. That’s not even close. Mankiw won by a landslide.”
Incidentally, when I went back to re-read DeLong’s commentary on Mankiw, I was greatly amused by the first two comments after his post:
Oh, one last thing: For the defenders of Krugman/DeLong in the comments, please please please don’t say, “They were just saying that once the jobs problem was fixed, economic growth would be above-trend. Of course they knew unemployment might remain high for years; don’t you read their blogs?!” This was Mankiw’s whole point. One might almost say their reaction to him involved…deliberate obtuseness.