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Niall Ferguson vs. Krugtron the Vincible (sic), Part I

Niall Ferguson has apparently started a series at HuffPo, documenting Paul Krugman’s botched predictions over the last several years. (In case you don’t know, Krugman has been absolutely vicious against NF for years now.) Obviously I am predisposed to love such an endeavor, and what’s really great is that Ferguson catches some things that I had missed.

(Before giving my favorite example, let me state that as far as I can tell, Brad DeLong / Krugman were right to pounce on Ferguson for one of his points regarding the CBO’s projections of debt/GDP. I wouldn’t bet my life on it, but it certainly seems that Ferguson switched between two types of scenarios from last year to this year’s CBO reports, making it seem as if the debt outlook had gotten worse over the last 12 months.)

Anyway, back to Ferguon’s HuffPo piece, his main theme is that Krugman has been repeatedly wrong about the euro. He claimed dozens of times that its breakup was coming, with increasing degrees of confidence and imminence. On top of that, he said people who disagreed with him were “delusional” etc. So by the standards Krugman uses against the “inflationistas”… well, you get the idea.

But the thing that made me laugh out loud was Ferguson’s handling of Krugman’s thoughts on Europe. So the below is Ferguson writing, with quotations from Krugman:

To begin with, Krugman was blithely confident that Europe would weather the economic storm better than the United States. On January 11, 2008, he hailed it as “The Comeback Continent”:

[KRUGMAN in Jan 2008:]… Since 2000, employment has actually grown a bit faster in Europe than in the United States … If you think Europe is a place where lots of able-bodied adults just sit at home collecting welfare checks, think again. … Europe’s economy looks a lot better now – both in absolute terms and compared with our economy – than it did a decade ago.

Krugman explained Europe’s comeback in terms of “deregulation”, a more competitive broadband market than the U.S., “strong social safety nets” and “very high taxes.” On May 19, 2008, after a visit to Berlin, he even told his faithful readers: “I have seen the future, and it works … in the heart of ‘old Europe’.”…

Finally, in December 2008, Krugman woke up to the fact that the “Comeback Continent” was in fact an “economic mess.” But what kind of mess?…The mess Krugman discerned was the failure of the German government to see “the need for a large, pan-European fiscal stimulus.” The main thing, he wrote in March 2009, was not to make the mistake of thinking that “big welfare states are … the cause of Europe’s current crisis. In fact … they’re actually a mitigating factor.” It was a theme he returned to when he and I debated the crisis in New York three months later, when he argued that “the human suffering [was] going to be much greater on this side of the Atlantic” because of Europe’s “strong social safety net.” Even in January 2010 he was still insisting that:

[KRUGMAN in Jan 2010:] The real lesson from Europe is actually the opposite of what conservatives claim: Europe is an economic success, and that success shows that social democracy works. … taking the longer view, the European economy works; it grows; it’s as dynamic, all in all, as our own.

All of this sheds (to say the least) interesting light on Krugman’s boast in an interview in March of this year to have been one of the few commentators who had “predicted the unfolding economic disaster in Europe.” This is by no means the only retrospective prediction Krugman has ever made, but it is surely the most shameless.

Good stuff.