Krugman Kontradiction on Unemployment Benefits
This is such a good Krugman Kontradiction that it might deserve a new category; call it a Paul Paradox. Dan in the comments referred me to Robert Wenzel, who in turn linked to Ed Yardeni catching Krugman in, well, a typical Kontradiction.
My post will actually give you “the rest of the story,” because Yardeni didn’t give the full quotation from Krugman in all its glory. But lucky for us, Robert Fellner emailed it to me. So watch:
Back in March 2010, Paul Krugman wrote an op ed in which he said:
So the Bunning blockade is over. For days, Senator Jim Bunning of Kentucky exploited Senate rules to block a one-month extension of unemployment benefits. In the end, he gave in, although not soon enough to prevent an interruption of payments to around 100,000 workers.
But while the blockade is over, its lessons remain. Some of those lessons involve the spectacular dysfunctionality of the Senate. What I want to focus on right now, however, is the incredible gap that has opened up between the parties. Today, Democrats and Republicans live in different universes, both intellectually and morally.
Take the question of helping the unemployed in the middle of a deep slump. What Democrats believe is what textbook economics says: that when the economy is deeply depressed, extending unemployment benefits not only helps those in need, it also reduces unemployment. That’s because the economy’s problem right now is lack of sufficient demand, and cash-strapped unemployed workers are likely to spend their benefits. In fact, the Congressional Budget Office says that aid to the unemployed is one of the most effective forms of economic stimulus, as measured by jobs created per dollar of outlay.
But that’s not how Republicans see it. Here’s what Senator Jon Kyl of Arizona, the second-ranking Republican in the Senate, had to say when defending Mr. Bunning’s position (although not joining his blockade): unemployment relief “doesn’t create new jobs. In fact, if anything, continuing to pay people unemployment compensation is a disincentive for them to seek new work.”
In Mr. Kyl’s view, then, what we really need to worry about right now — with more than five unemployed workers for every job opening, and long-term unemployment at its highest level since the Great Depression — is whether we’re reducing the incentive of the unemployed to find jobs. To me, that’s a bizarre point of view — but then, I don’t live in Mr. Kyl’s universe.
And the difference between the two universes isn’t just intellectual, it’s also moral.
Bill Clinton famously told a suffering constituent, “I feel your pain.” But the thing is, he did and does — while many other politicians clearly don’t. Or perhaps it would be fairer to say that the parties feel the pain of different people.
During the debate over unemployment benefits, Senator Jeff Merkley, a Democrat of Oregon, made a plea for action on behalf of those in need. In response, Mr. Bunning blurted out an expletive. That was undignified — but not that different, in substance, from the position of leading Republicans.
…
[B]ipartisanship is now a foolish dream. How can the parties agree on policy when they have utterly different visions of how the economy works, when one party feels for the unemployed, while the other weeps over affluent victims of the “death tax”?
…
Someday, somehow, we as a nation will once again find ourselves living on the same planet. But for now, we aren’t. And that’s just the way it is.
I put the lines about “textbook economics,” and about the Republicans not feeling the workers’ pain, in bold. Check out the following quotation from Krugman’s 2009 textbook (supplied by Yardeni):
“Public policy designed to help workers who lose their jobs can lead to structural unemployment as an unintended side effect. . . . In other countries, particularly in Europe, benefits are more generous and last longer. The drawback to this generosity is that it reduces a worker’s incentive to quickly find a new job. Generous unemployment benefits in some European countries are widely believed to be one of the main causes of ‘Eurosclerosis,’ the persistent high unemployment that affects a number of European countries.”
I have just two comments:
(A) This is not a contradiction, it is still just a Kontradiction. Krugman and his fans can say, “What the heck is wrong with you idiots? Yes, at any given time Europe tends to have a higher natural unemployment rate than the US, because they have more generous unemployment benefits. And, right now, the whole West is suffering from insufficient aggregate demand, where getting people to spend via government transfer payments boosts the economy. Krugman talked about that in his book too. No contradiction.”
(B) Even conceding the above point, Krugman is still being outrageous on the “I feel your pain” stuff. Either that, or he and his co-author don’t care about unemployed Europeans.
Just when the contradictions get VERY, VERY explicit, you write “This is not a contradiction”?
Maybe you’re hedging your bet, because the investment sounds just to good to be true, but when the same person writes:
“In Mr. Kyl’s view, then, what we really need to worry about right now — with more than five unemployed workers for every job opening, and long-term unemployment at its highest level since the Great Depression — is whether we’re reducing the incentive of the unemployed to find jobs. To me, that’s a bizarre point of view — but then, I don’t live in Mr. Kyl’s universe.”
and
“Public policy designed to help workers who lose their jobs can lead to structural unemployment as an unintended side effect. . . . In other countries, particularly in Europe, benefits are more generous and last longer. The drawback to this generosity is that it reduces a worker’s incentive to quickly find a new job. Generous unemployment benefits in some European countries are widely believed to be one of the main causes of ‘Eurosclerosis,’ the persistent high unemployment that affects a number of European countries.”
That person is someone who is talking out of two orifices. That’s a garden variety, plain vanilla, straight up contradiction.
I agree completely, Major Freedom. I thought the implicit moral superiority Krugman claims over this “bizarre” view, while that view is the one he teaches in the economic textbook his wrote, was just the most clear example of what exactly Krugman has become – a total shill for big government.
I don’t mean to rain on your guys’ parade, but go look closely at the quote. Krugman wasn’t saying that Kyl was bizarre for thinking that unemployment benefits could reduce the incentive to work. Rather, Krugman considered it bizarre that Kyl thought this issue was the thing to be worried about in the midst of a giant slump. (I’m on a WordPress screen and don’t have the actual quotes in front of me, but I’m close.)
Sigh…this guy is as slippery as it gets. Ya I see your point, Bob. Your ability to give the other side the benefit of the doubt and see things as objectively as possible remains extraordinary.
Don’t feel bad, guys. I’m a professional.
Yeah, I’m with Fellner’s concession. You’re right.
And thiat is probably exactly how Krugman is going to spin it.
It’s so terrible of Krugman to be able to obviously contrast Kyl’s absurd structure of priorities against the priorities of the average American and end up right, isn’t it?
Krugman isn’t being “slippery” here. You guys just had an incredible failure to read what was right there because of your philosophical blinders.
How do you make it through elementary texts when you can make such a simple mistake when what you read doesn’t agree with what you wanted to read?
I’m being kind, too. “AP Lerner” is clearly unable to read plain English.
You should have put this sentence in bold too:
“That’s because the economy’s problem right now is lack of sufficient demand”
I don’t see a contradiction in the statement: The same policy can lead to different results under different premisses.
It seems that the reason for this kontradiction is Krugman’s unwillingness to alienate his audience even for a millisecond. He’s still a professional economist who understands incentives, market signals and trade, but as a Democratic cheerleader he has to downplay that side of himself. Therefore he can’t clarify in his blog post that “Yes, under certain circumstances excessive unemployment benefits can disincentivize the unemployed, but things are a bit different in a recession” (whether that argument is sound is a different matter). His audience understands partisan arguments like “Republicans don’t like unemployment benefits because they are heartless poopyheads, but the Democrats are kind and caring heroes!” much better.
Wow I wish I had as much free time to split hairs as you do Mr. Murphy. Are you collecting unemployment benefits?
(yes, that was a joke. sarcasm. I wish nothing but full employment and prosperity for Mr. Murphy and his army of followers, no matter wrong their views are)