Krugman Talking About Productive Capacity, and Demand vs. Supply Shocks, After the Crisis Struck
I am mostly making this post for bookkeeping purposes for myself, but for those of you arguing with me in the comments of my recent posts, take a look. I welcome your comments.
The following posts are from Krugman, discussing other economists who were trying to defuse the calls for more stimulus, by saying the economy post-2008 was facing structural problems. I have ranked them in order of helping my cause in the current dispute over potential GDP.
1) In this 2012 post, Krugman can’t believe even professional economists think that the economy’s productive capacity could be lower. They are confusing supply and demand.
2) In this post from 2012 Krugman singles out the Austrians by name, who claim that the economy’s productive capacity is lower because of malinvestments made during the boom. He says no, the data show that can’t be right. Now to be sure, Krugman isn’t now saying that potential output in 2012 was lower because of boom-time malinvestments, but he IS saying it was lower. So he was clearly wrong, back in 2012, when he was saying any moron could tell from looking at CPI and bond yields that the Austrian story made no sense.
3) In this piece from mid-2013 Krugman dismisses people saying the economy had a structural problem. In fairness, you could say there that he was focusing on sectoral mismatches. (Incidentally, note the non sequitur in that post. His data are entirely consistent with my worldview. It’s amazing to see his inability to get into other people’s heads. Of COURSE unemployment would fall the most in states where it initially rose the most. Duh.)
4) In this late 2013 piece Krugman again says he can’t believe some economists are still banging on about the economy facing a structural issue. Clearly the problem is lack of demand.
Dr, Murphy,
I have a questions I’d like to ask. Is it your position that because we now observe that the path of potential GDP flattened after the 2008 recession that is then strong proof that unemployment in that period was mostly structural?
Hi Murphy,
I think today is the day that everyone who cares about truth in economics stops using the LANGUAGE of anti-economics economists.
They use the word “stimulus” and THEN claim to be neutral and non-a-priori about it.
Stimulus by definition means a boost, a gain, an energizing sort of action.
But if we stick to the truth, we can’t call what the Keynesian yahoos are calling “stimulus”.
We should start using language that does not presume the fools are right before we even begin.
It’s even worse in the climate ch–I mean global warming debate, MF. There they call it dirty vs. clean energy. (We don’t use those labels.)
True that.
And, climate change legislation is a multi trillion dollar scam to line the pockets of criminals and liars.
Not audited,
World was mooching off of American taxpayers by a corrupt monetary system controlled by literal Satanists, and unfair trade deals.
No longer.
https://imgur.com/qwtrHSr
All the racists and bigots who claimed China was growing so fast because of “culture” have no clue how American taxpayers effectively built China.
Keynesians and Monetarists have blinders on. They are unable to detect a lot of problems because it would contradict their own collectivist worldviews.