19 Jun 2009

Being Tough But Fair With My Buddy Krugman

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During my three-year stint as a professor, I strove to be “tough but fair.” (I think I got that description from the drill instructor from Full Metal Jacket, which in retrospect may not have been the ideal model.)

Anyway, since I have been waterboarding Krugman’s articles recently, I feel compelled to pass this one along from August 2005. Whatever else we may think of him, we must admit that Krugman “called” the housing bubble before many commentators (including me).

At this point I really don’t know what to think. My inclination is to say that Krugman called for any measures to boost spending, and then realized to his horror that they had unintended consequences, or that he had created a monster. After all, it sure seems as if Krugman advocated a Goldilocks stimulus plan, in which Greenspan cut interest rates just enough to fill the “output gap,” but then jacked them up at precisely the right time to avoid an unsustainable boom.

But since I don’t subscribe to Keynesian theory, maybe I’m misreading him.

Final note: I learned of this 2005 article from, you guessed it, Bob Roddis. For those who may be discouraged because I apparently post everything Roddis emails me, whereas I have been ignoring you: Don’t fret. I mention about 10% of what BR sends me. Sometimes I wonder if he is actually a computer program.

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