15 Jan 2009

Filling the Holes in Krugman’s Analysis

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You may be getting sick of Krugman-bashing, and in fact so am I. (My next Mises Daily will be a critique of Robert Lucas.) Yet I couldn’t let this one go:

So what I’ve come to realize is that in these last few months Krugman has implemented his own private-sector stimulus plan. He has been working furiously, cranking out fallacious articles and blog posts, which then provide work for people like Bill Anderson and me, as well as thousands of other bloggers who still can’t understand why it’s bad for families to save more. A clever chap, this Dr. Krugman, no?

Today my make-work will fill in two holes in a recent Krugman blog post. The first flaw is his belief that output generates employment (rather than vice versa), and the second is his belief that government spending is a measure of real output.

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