13 Oct 2011

The Most Klassic Krugman Kontradiction of All Time

Economics, Krugman 48 Comments

This actually made me get up and pace around the office for a minute. I had to let it sink in, it was so delicious.

First, the context: People have the long knives out for Russ Roberts, who had disputed the evidence that Krugman had given for a Keynesian worldview, and then Russ Roberts concluded:

Krugman is a Keynesian because he wants bigger government. I’m an anti-Keynesian because I want smaller government. Both of us can find evidence for our worldviews.

Now that was a surprising thing for Roberts of all people to say (as even Daniel Kuehn agreed). For example, if you listen to this EconTalk podcast where Roberts interviews a card-carrying Keynesian, Roberts is the model of courtesy. There are lots of people in the liberty movement for whom the above statement might be accurate, but Roberts would not have been near the top of my list.

So perhaps he mistyped, and meant to say something more like, “There aren’t controlled experiments in economics, and to be honest I think we all bring our biases to the table. I can look out and see all sorts of ‘objective’ evidence that Keynesian policies fail, but I have to be fair and admit Krugman can see just the opposite. In the grand scheme, I can’t honestly say my evidence is more objective than his. Of course I truly believe I’m right, but let’s be frank, maybe I can’t help but feel that way.”

Anyway, back to Krugman today and his predictable reaction to Roberts’ candid admission:

What is true is that some conservatives in America have always opposed Keynesian thought because they believe it legitimizes an active role for government — but that’s not what Keynesianism is about, and not the reason I or others support it.

…Russ Roberts may choose his economic views because they support his political prejudices. I try not to. Maybe I sometimes fall short — but I try to analyze the economy as best I can, never mind what’s politically convenient, and indeed to bend over backward to avoid believing things that make me comfortable, to avoid turning everything into a morality play that confirms my political values.

OK here my BS meter was off the charts. Since I have been reading Krugman, I can’t think of a single episode where there has been economic or political controversy, and Krugman used his economic analysis to weigh in on the side of the group wanting smaller government on that particular issue. I’m not saying Krugman is a full-blown socialist, I’m saying that when he jumps into a fight, I can’t ever remember him delivering uppercuts to the people whose position happens to imply a smaller bigger role for government.

(In case you think I’m being a hypocrite, I have–on very rare occasions, to be sure–grudgingly conceded that Krugman/DeLong had a point on something, and that my free-market brethren were being inconsistent in their arguments. It’s true, I have never come out and called for more government powers, but I do try to be mindful of the distinction between economic analysis and moral considerations. I can’t find the best examples of this, but after looking for a few minutes I came up with this post, where I defended Krugman from Scott Sumner and Pete Boettke. Of course, you could claim that my anti-Sumner anti-GMU bias just outweighed my anti-Krugman bias there; perhaps so.)

Anyway, as if sensing that people would be skeptical, Krugman then offers up an example of how he doesn’t make economics a morality play:

Here’s an example: is economic inequality the source of our macroeconomic malaise? Many people think so — and I’ve written a lot about the evils of soaring inequality. But I have not gone that route. I’m not ruling out a connection between inequality and the mess we’re in, but for now I don’t see a clear mechanism, and I often annoy liberal audiences by saying that it’s probably possible to have a full-employment economy largely producing luxury goods for the richest 1 percent. More equality would be good, but not, as far as I can tell, because it would restore full employment.

So I’m trying to figure this thing out, as best I can. If you’re not, we’re not in the same business.

OK, I put the “often annoy liberal audiences” in bold. I want someone to show me one time in his blog where Krugman ever made that point. I’m not betting my life that he didn’t, just saying I can’t ever remember him saying it.

And now, what you’ve all been waiting for. The Most Klassic Krugman Kontradiction of All Time. After the above post, where Krugman pats himself on the back–in contrast to that ideologue Russ Roberts–for his willingness to not mix up issues of inequality with the causes of our downturn, IN THE VERY NEXT #)$(#$* POST, Krugman writes:

A wonderful juxtaposition:

Max Abelson reports on the sorrows of the financial elite:

An era of decline and disappointment for bankers may not end for years, according to interviews with more than two dozen executives and investors. Blaming government interference and persecution, they say there isn’t enough global stability, leverage or risk appetite to triumph in the current slump.

Options Group’s Karp said he met last month over tea at the Gramercy Park Hotel in New York with a trader who made $500,000 last year at one of the six largest U.S. banks.

The trader, a 27-year-old Ivy League graduate, complained that he has worked harder this year and will be paid less. The headhunter told him to stay put and collect his bonus.

“This is very demoralizing to people,” Karp said. “Especially young guys who have gone to college and wanted to come onto the Street, having dreams of becoming millionaires.”

Meanwhile, Catherine Rampell reports on Bankers’ Salaries vs. Everyone Else’s, telling us that

the average salary in the industry in 2010 was $361,330 — five and a half times the average salary in the rest of the private sector in the city ($66,120). By contrast, 30 years ago such salaries were only twice as high as in the rest of the private sector.

It would all be hilariously funny if these people weren’t destroying the world.

An interesting juxtaposition indeed. Not an actual contradiction, of course. A Krugman Kontradiction. He can’t be convicted in any court, but boy oh boy 99% of his readers will get the message.

48 Responses to “The Most Klassic Krugman Kontradiction of All Time”

  1. skylien says:

    “There aren’t controlled experiments in economics, and to be honest I think we all bring our biases to the table. I can look out and see all sorts of ‘objective’ evidence that Keynesian policies fail, but I have to be fair and admit Krugman can see just the opposite. In the grand scheme, I can’t honestly say my evidence is more objective than his. Of course I truly believe I’m right, but let’s be frank, maybe I can’t help but feel that way.”

    This is exactly how I read it. I thought the end of that paragraph Roberts wrote made that clear… Whatever..

  2. Silas Barta says:

    I saw a different way Krugman made the same contradiction recently. You know how he (not to mention Sumner) keep hammering in that “economics is not a morality play” (usually as a way to get you to turn a blind eye toward moral hazard effects of bailouts for big banks or people who got too bubbly)? Well, in a recent column, he has this line:

    In the second act, the bubbles burst — but bankers were bailed out by taxpayers, with remarkably few strings attached, even as ordinary workers continued to suffer the consequences of the bankers’ sins.

    Sins? Heavens, no! That’s not what this is about, right? We’re not supposed to be moralizing!

  3. marris says:

    Ugh. Here come the indignant responses.

    “Well, I never…”

    “Picking and choosing evidence to conform to your ideology?!?!?! In science ?!?!?”

    [these are funnier when said with a British accent]

    It’s somewhat pathetic that Roberts comes out and honestly states his economic ideas, why he holds them, and from I can tell, offers a warning that free-market people should also take care to keep their ideology at bay in their analysis… and gets attacked for being something like a creationist or a geocentrist. Here is the funniest thing Daniel Kuhn has ever written:

    Needless to say, I see no evidence at all that that’s why Krugman views Keynesianism favorably.

    Bob, didn’t you post something a while back where Krugman talked about the influence of Asimov’s Foundation novels on Krugman as a kid? He says he finds the idea of people moving the ‘levers of society’ around very appealing or something, right? What a klown.

  4. Robert says:

    Suppose you think that a full-employment economy with a gross inequality of income is a “destroyed” economy. And suppose you also think that these complicated (unregulated?) financial instruments that bankers and financiers have been developing have been making the world more unequal.

    Then you can consistently make Krugman’s statements in the successive posts.

    In other words, Bob has no case if he would read a bit more imaginatively.

    • Bob Murphy says:

      Robert V., are you making a joke? If you are, then heh good one. Thanks for taking my side. If you’re not, then, I guess, heh, I can’t believe you’re trying to defend Krugman like that. :/

    • marris says:

      > Suppose you think that a full-employment economy with a gross inequality of income is a “destroyed” economy. And suppose you also think that these complicated (unregulated?) financial instruments that bankers and financiers have been developing have been making the world more unequal.

      No one is saying that Krugman is “bad” for being turned off by income inequality. Or that an unequal distribution is preferable to an an equal one. Most libertarians don’t think equality conditions should really be _part_ of your valuation. But that’s all besides the point.

      The points here are:

      (1) Krugman likes Keynesianism, at least in part, because he likes the idea of the government agencies fixing problems. Like “society has gone off the rails, so the government needs to push it back into place.”

      (2) Krugman thinks all mistakes are of the form “we pushed society from state A to B [bad] when we should have pushed A to C [good].” There are few, if any, mistakes of the form “we should not have pushed at all. A was fine.”

      When there is a screwup and most pushers admit that things would have been better with a hands-off approach, Krugman goes nuts. He says that “well, society only got to A because there was a bad push even _further_ in the past. What? Are you guys saying you’re happy with the way things were at A? Look all all the inequality in A! No, the planners screwed up by letting us get to A in the first place. The solution is obviously ‘better’ pushing schemes.”

  5. Major_Freedom says:

    I’m trying to see the Kontradiction, but I can’t see it.

    In the second quote, Krugman says that morality should not be used/presumed in the course of making economic arguments. OK, fine. I think it’s impossible to make an economics argument without presupposing a morality, but whatever. Assume it’s true for the sake of argument.

    In the third quote, yes, Krugman is clearly implying a morality. He believes inequality is a bad thing. But I don’t see him making an economics argument in that bit.

    I mean, in the second quote he even says: “I’ve written a lot about the evils of soaring inequality.” He thinks inequality is evil. In the third quote, he shows data that show the extent of the inequality he thinks is evil. But he didn’t use that moral “evil” (in his opinion) to make an economics argument, like why there continues to be a depression, high unemployment, etc.

    Maybe I am missing the elephant in the room, but where’s the Kontradiction? I feel kind of bad here, because you think this is the biggest Kontradiction “of all time.”

    Are you saying that Krugman is not allowed to make a moral argument AT ALL? He says to keep morality separate from economics. Isn’t he just making (implying) a moral argument about inequality?

    • Bob Murphy says:

      MF, so when Krugman says that there is a bigger income gap now than ever before, and that the super rich bankers are “destroying the world,” the average progressive reader is going to conclude, “I personally thought that inequality contributed to a bad economy, but I guess I was wrong? Krugman just set me straight.” ?

      • Major_Freedom says:

        Hey, there is no doubt that his readers will conclude all sorts of dumb stuff. After all, they are fans of Krugman! I’ll agree with you about what his readers might conclude.

        What I meant was, I don’t see how Krugman made a Kontradiction, that’s all.

        Krugman holds that bankers destroyed the world yes, but not because of the fact that they earn a radically higher income, i.e. inequality, but because they were not under a FULL socialist umbrella of state control.

        I think what you’re really pointing out are flaws in his readers. Sure, he might even have been consciously aware of this, but what he said, I cannot see a Kontradiction, strictly speaking.

        • Major_Freedom says:

          I read your post below about misleading his readers, and sorry, I didn’t know that is what a Kontradiction was. I thought a Kontradiction was when Krugman uses the same data to make different arguments, depending on who is armed with that data and what “side of the aisle” their arguments are.

          For example, your Kontradiction post on Krugman using the data on the differences of unemployment across states. When he first considered it, on account of “conservatives” saying unemployment is different across states according to the housing bubble, he said that the differences were minimal, because “it’s aggregate demand stupid!”. But then when word got out of stimulus spending, the SAME DATA was then intepreted by Krugman as having significant differences across states, because Keynesian stimulus was different across states.

          I thought that is a Krugman Kontradiction. I didn’t know that it was when he goads and leads his readers into making conclusions that contradict Krugman’s professed convictions.

          If that is what you mean, then sure, it’s a Kontradiction.

  6. Daniel Kuehn says:

    I don’t get the contradiction.

    Isn’t he just saying that the crisis has its roots in the financial sector and mocking the fact that they’re bemoaning their salaries when in fact they’re doing stupendously well?

    You can have an ideological/moral reaction to something or an ideological/moral political stance without making scientific claims on the basis of your ideology or morality.

    That said, I think about 85% of your Krugman Kontradictions aren’t very convincing – but like MF I feel sorta bad (or slow?) that I’m not getting the biggest one.

    To put it another way – what if a transcript of a cafeteria discussion at the Fed was released and all the central bankers and Fed officials started complaining about how they didn’t get a raise. Wouldn’t you write a snippy post about how it’s absurd that they are complaining because those guys caused the problem in the first place, and they actually make much more than the average American. That’s all Krugman seems to be saying. Where’s the contradiction?

    • Bob Murphy says:

      DK, you’re right I probably would write a “snippy post about how it’s absurd that” Fed officials caused the crash, and then now wanted a raise. And, if I had posted immediately before that a different post in which I said, “You know, a lot of libertarian types today rail on the Fed. But I very often chastise them, and remind them that in principle the Fed could do a very good job of steering the economy. Yes, the Fed’s existence is immoral, but I try to stay clear in my own work on the difference between the Fed’s morality and its ability to do a good job steering the economy.”

      If I had such posts back-to-back, it would be totally fine for you to say, “Uh Bob, you’re not really being courageous by standing up to the Fed haters. You just gave them all high fives in your second post on the cafeteria transcripts. That’s fine, but don’t pat yourself on the back for going against the crowd.”

  7. Daniel Hewitt says:

    “The Most Klassic Krugman Kontradiction of All Time” would have to be a blatant contradiction, not an implied one. I agree with MF & DK.

    However, what troubles me is Krugman’s claim that he has never said that inequality is a drag on an economy. I can’t think of any examples where he has explicitly said that, but I am nearly certain that he has.

    • Richard Moss says:

      I thought the defining feature of a “Krugman Kontradiction” was that it was not blatant, but implied. Otherwise, it would just be a “contradiction”.

      • Daniel Hewitt says:

        Oh. I never clued (klued?) into that. I always thought that “Krugman Kontradiction” meant “Krugman contradiction”

        • Bob Murphy says:

          Get with the program. How long have you been reading this blog? Maybe I need to publish a glossary.

          • Daniel Hewitt says:

            A few years now….

            [hanging my head in shame]

            • Bob Murphy says:

              (In all seriousness, at some point I defined a Krugman Kontradiction. It’s not an outright contradiction, because Krugman is too slippery and smart for that. He rarely literally contradicts himself. He just misleads the heck out of the average reader. Like, who would have thought from today’s post, that Krugman thinks inequality has nothing to do with a bad economy?)

  8. Robert says:

    “OK, I put the “often annoy liberal audiences” in bold. I want someone to show me one time in his blog where Krugman ever made that point. I’m not betting my life that he didn’t, just saying I can’t ever remember him saying it.”



    • Bob Murphy says:

      Robert OK that’s pretty warm. I would really like to find one where Krugman makes the actual point he claims in his recent post–i.e. where he flatly tells his fans that inequality may be immoral, but it is consistent with full employment.

      Strictly speaking, your example doesn’t show that. Krugman is making the weaker claim, “Yes inequality might be causing high unemployment, but Reich’s suggested mechanism doesn’t make sense to me. Help with my unbelief, oh Robert!”

      (Obviously I’m exaggerating, but I hope you see that even your example doesn’t totally fit the bill of what Krugman claims he says “often.”)

      • Robert says:

        The idea that the economy is stagnating because the share of income held by the wealthy is too high is an extremely, extremely popular liberal notion. I don’t blame you for not being aware of this, but it’s clear to me that this is what Krugman was referring to in his post.

        Let’s put it this way — how often does Krugman thoughtfully contemplate and explain opposing views or liberal flaws? Not very often. So, by Krugman standards, that he wrote an entire post about this is pretty momentous.

        • Bob Murphy says:

          Robert, I am flabbergasted at your reply. I’m pointing out that Krugman didn’t technically do in that post what he claims he does “often,” and your response is to say (paraphrasing), “Since Krugman almost never does anything even remotely like this, it should count.” ?

  9. Ryan Murphy says:

    He wrote an entire book arguing in favor of free trade.

    • Silas Barta says:

      … and then repudiated its relevance the moment the left adopted the “protect are jerbs!” meme.

      • Ryan Murphy says:

        “single episode ”

        don’t move the goalposts.

        • Silas Barta says:

          It’s not very courageous the promote free trade until your ideological buddies start worrying about losing their jobs and then see the connection to free trade.

    • Bob Murphy says:

      Ryan, fair enough, but I said, “Since I have been reading Krugman…” I meant, “In the last several years when Krugman has been a huge deal, representing the Keynesian viewpoint.”

      It’s fine for you to bring that up, but when that book came out, Krugman wasn’t nearly the darling of the Left that he is today.

      I’ll see if Desolation Jones’ Robert’s links are good examples to blow me up…

  10. marris says:

    I don’t know what criteria Bob uses to compare kontradictions and decide which one is “bigger.”

    I like this one because it’s a sort of meta-kontradiction. Like Krugman writes “I don’t make kontradictions. Or at least I try not to.” and then immediately makes one.

  11. Anon9 says:

    “Since I have been reading Krugman, I can’t think of a single episode where there has been economic or political controversy, and Krugman used his economic analysis to weigh in on the side of the group wanting smaller government on that particular issue.”

    Might I recommend the following links?

    http://www.nytimes.com/2000/06/07/opinion/reckonings-a-rent-affair.html (here he opposes rent controls)

    http://web.mit.edu/krugman/www/ricardo.htm (here he argues in favor of free trade)

    http://www.nytimes.com/2002/05/07/opinion/true-blue-americans.html (here he opposes farm subsidies and even praises Bush, kind of, for doing likewise)

    http://www.slate.com/articles/business/the_dismal_science/1997/03/in_praise_of_cheap_labor.html (here he advocates sweatshops)

    http://www.nytimes.com/2000/06/25/opinion/reckonings-driving-under-the-influence.html (here he opposes ethanol subsidies)

    http://www.nytimes.com/2000/03/29/opinion/reckonings-pursuing-happiness.html?pagewanted=2&src=pm (here he disses the minimum wage and France)

    I dunno; maybe Krugman has just gotten more liberal as he’s gotten older.

    • Bob Murphy says:

      I don’t have time to check the links, but that’s good if he said all that stuff. I realize I’m going to be accused of moving the goalposts, but guys look–the latest example you’re giving there, was from 2002. Isn’t that interesting, that we have to go back nine years on a guy who writes multiple blog posts per day?

      Maybe there are other examples more recent.

      • Daniel Hewitt says:

        That was back when he used to be an economist. Robin would never allow him to write such things now. These old articles sometimes come back to embarrass him, now that he is a political activist.

      • JLonsdale says:


        Here he is arguing that it isn’t speculation driving up the price of commodities. It’s a recent position where he is opposed to many people who see this as a problem that needs government regulation to fix it.

        • Bob Murphy says:

          OK that’s a good one, yes I remember him saying that at the time too.

    • Tel says:

      When I read Murphy’s comment about Krugman and big government vs small government I immediately thought of that 1997 article about the sweatshops, but maybe Murphy hasn’t read enough of the old Krugman.

      Something changed around about, hmm, 2005 or 2006. You don’t tend to see the same things coming out of him recently.

      Liberals want government to do certain things, like provide essential health care; the size of government per se isn’t the objective.

      Obviously, by saying that government should provide health care, you are implicitly imposing a regime where private interests are squeezed out of providing equivalent services. No private business can survive when competing head-to-head against an infinitely resourced competitor (especially when that competitor gets to make up the rules as they go along).

      I mean the equivalent statement going the other say is to say, “Hey, I merely want a competitive free market in health care where the consumers get a lot of options open to them, and costs are kept under control by supply and demand, the size of government per se isn’t the objective here.”

      I Am Not Your Mirror Image

      I agree with Krugman on this one. Roberts and Krugman are not mirror images by any means. After all, Roberts after all, makes some attempt to be honest with himself at least.

  12. Cahal says:

    I don’t see the problem. Krugman says he hasn’t argued that inequality is a problem in and of itself, and then goes on to criticise financial sector inequality on the grounds that they are destroying the economy.

  13. MamMoTh says:

    Another Murphy Manipulation of Krugman’s Kontradictions?

  14. Desolation Jones says:

    Krugman has recently criticized several times the government spending fantasy that is MMT.

    • MamMoTh says:

      Well he criticized a strawman, not MMT, like Murphy did. At least Krugman admitted he had not read anything on MMT but a blog post written by a non expert.

      Great publicity though!

      • Desolation Jones says:

        Strawman or not, the sentiment was still there! =)

        • MamMoTh says:

          Sure! And now we are legion!

  15. Desolation Jones says:

    “OK, I put the “often annoy liberal audiences” in bold. I want someone to show me one time in his blog where Krugman ever made that point. I’m not betting my life that he didn’t, just saying I can’t ever remember him saying it.”

    I know you said specifically on his blog, but Krugman didn’t not mention his blog and he has a life outside his blog.


    • Desolation Jones says:

      Okay, it turns out he mentioned his presentation in his blog. There you go.


    • Desolation Jones says:

      And another


      “I’d like to make this a morality play in which the crisis was caused by injustice, but it’s not that simple. It’s hard to see how inequality led in any direct way to the slump.”

      • marris says:

        Wait, what about the sentences that _immediately_ follow?

        … You have to tell a more indirect story. One issue is that the extraordinary rewards to the upper 0.01% played a role in causing excessive speculation and risk-taking, leading to the crash. Another is that both rising inequality and the Great Recession were due, in large part, to Reaganism – to the belief that the unrestrained market is always right…

        Krugman is saying that recessions are aggregate demand drops and there is no reason why inequality alone should lead to such drops. But he can always back out and say it “contributed” or something.

        I think http://voxeu.org/index.php?q=node/6668 is probably the best thing he’s ever written [I don’t think it’s correct, but it is very well written]. He portrays his intellectual opponents as barbarian hordes attacking the monasteries of knowledge. Contrast this with the value-free, “let’s understand what’s really going on” tone of his Russ Roberts blog post.

  16. John Becker says:

    I thought Bob could’ve ended the post where Krugman said that he bent over backwards to avoid feeling comfortable. That was a real knee slapper. That would be like Floyd Mayweather saying he wasn’t taking sides during one of his fights.

    • Bob Murphy says:

      Well in fairness, it really would be uncomfortable to bend over backwards. Unless Krugman is double jointed.

      • John Becker says:

        Krugman has the flexibility of a 90 year old man’s broken leg stuck in a huge brace with crippling arthritis in its knee and severe muscular dystrophy

  17. Keshav Srinivasan says:

    I have literally found a Krugman column from 2003 in which he specifically suggests that an economy is focused only on selling luxury goods is unsustainable: http://www.pkarchive.org/column/123003.html

    That seems like an out-and-out contradiction, not a Krugman Kontradiction.