10
Aug
2015
It Takes a Village to Point Out Krugman’s Problem
Ah, see everybody? Look at how much better this post was, since Waldek stepped up to the plate. One man can make a difference.
But seriously, click this link. What would Krugman say? I’m thinking he would go with, “Oh please, another ‘gotcha.’ Don’t these guys have anything better to do?”
Krugman: A life devoted to a cause other than individual rights and freedoms, which necessarily compelled him to contradict himself.
With the amount of damage he has helped bring about, he ought to be ashamed.
There is an alternative to conservatism AND progressivism.
I have a paleo friend who calls Krugman the most dangerous man alive. I don’t know that he’s wrong, even with Ted Cruz lurking out there selling himself to fans of Field of Dreams.
The good part about Obama is that no one takes him particularly seriously even if he has political power. Deep down, people know that he’s a know-it-all community college prof who’s too far in over his head to even understand that he’s in over his head. He’s not smart enough to be particularly dangerous, and so he goes around setting small fires that mostly burn themselves out.
But Krugman, like Keynes, is a different beast, and if the wrong people take him seriously, tens of thousands of people will die unnoticed and with precious few understanding that those deaths were unnecessary. That’s why Bob and Tom are such helpful gadflies in the here and now, beyond their contributions to the liberal tradition.
I thoroughly disagree about Obama. I agree mostly about Krugman.
“Our theories are magical and can explain everything.”
-What P. Krugman effectively says in his posts on the subject.
Aw, man! I was totally sure you were going to use this chart:
http://krugman.blogs.nytimes.com/2015/08/08/mornings-in-america/
I didn’t entirely expect the updated chart, though I anticipated the possibility.
I like the post but I’m pretty sure Krugman thinks that economic health is a function of both the budget deficit and other things (like for example “animal spirits”).
So he would claim that better than expected other things/animal spirits have countered austerity. And he probably also thinks that a great president who introduced great things things like ACA have bolstered animal spirits.
So I’m guessing he’s not about to concede defeat based on this post.
I’m surprised the explainers of Krugman’s inconsistencies haven’t arrived yet.
I will take a stab at it:
If not for the austerity, Obama’s economy would have grown 10% a year and unemployment would be negative 25%. The Austerians have stolen our future.
Economics is so much fun because without real counterfactuals you are just never wrong. There is no reason to lose your smug face ever.
And even if anyone questions the smug faces, there is no real counterfactual against which to determine if it was the economics that encouraged those faces.
(I had a smug face saying that)
I have my (armchair) theory that the proportional amount of people who have egos that don’t allow them to admit being wrong on something are by far highest within the economics profession than compared to any other academic area. Of course unfortunately I cannot prove this theory since it is impossible to prove economists wrong (empirically), on the other hand I cannot be proven wrong either.
😉
That’s why the number of Austrians ought to grow relative to other school’s followers.
Austrian econ’s bread and butter is engaging non-empirical “meta” theories behind all economics schools, such as Keynesianism and Monetarism.
The main problem is that almost every Keynesian and Monetarist doesn’t realize how dependent they are on those meta theories, so much so that they have come to believe that “the data” is speaking to them, telling them that their own theories are being proved through observation abstracted from the meta theory that is actually guiding them in how they understand the language of the data.
An Austrian and Keynesian can look at the exact same set of historical data, e.g. unemployment rates, interest rates, spending rates, prices, supply, government deficits, inflation, you name it, and they can agree on the entirety of those data values.
Yet they make different conclusions, not because one is just not accepting the data where the other is, but rather because they are each adding a different meta theory component to the totality of the concept of understanding. I say “add” because it is a choice to use one theory over another, whereas the data of history is absolute and given.
Mises went deeper and showed that without a theory, all history would be a chaotic flux of randomness. We add our own theory to the understanding of history.
Most Keynesians like to believe that the reason they are using Keynesian theory is because somehow the data of history has added a proving component to the theory. But the truth is the exact opposite. The Keynesians think like Keynesians in the present, logically and temporally prior to understanding all future data that eventually becomes history. That mixture of data plus Keynesian theory then miraculously (I say that sarcastically) becomes proof that Keynesianism is right.
As an analogy, it would be like an English speaker visiting a foreign country that uses English letters in their language, and then the visitor sees English words within the foreign words, like for example seeing the English word “hen”, a female chicken, in the German word “Verstehen”, and then concluding that the data of German history proves the English language correct.
Nice gotcha!
I feel like you should add a trace for private sector jobs under Reagan as well.
There are three lines on the top chart, so it’s a bit weird to just skip the third one when it comes to jobs. There was some steep jobs growth under Reagan, that’s just looking at the Total Non-Farm numbers, which I think includes government jobs, so we would need to subtract those out. Also what year is the “official” start of the Reagan recovery? I suppose 1983.
Well Bob, I’ve heard it said you make a big deal over a few minor typos, like “fiscal doomsday machine” or “one of the worst policy ideas in our nation’s history.”
The random letters “dooms”, “machine” and “worst policy” were accidentally typed.
Not that sort of purely random typo… quite a different sort as it happens.
http://video.cnbc.com/gallery/?video=3000035640
Around 04:35 you hear in the CNBC interview (from 2011 during the debt ceiling debate), David Stockman describes the growing Federal debt by saying, “We are running a fiscal doomsday machine.”
Then two years later in 2013 Krugman just happens to use exactly the same (unusual) phrase to describe the exact opposite policy, a policy that cuts spending in an attempt to bring the debt under control. See how that works? You just accidentally typo your opponents colourful turn of phrase into precisely the opposite context as originally intended.
Sort of thing that could happen to anyone.
Tel they are both referencing Dr. Strangelove, not sure if you saw that…
What, “How I Learned To Stop Worrying And Love Inflationary Finance”?
Bob, that would be your common or garden doomsday machine, standard thermonuclear stuff, lots of mad scientists have them.
No I’m talking about a Fiscal Doomsday Machine, which is a rare and special invention. Only David Stockman and Paul Krugman have ever seen one, and out of those two guys, only one had any understanding what he was looking at.
“Boy I wish we had one of those doomsday machines!” — General Turgidson
By the way, on the topic of economic growth in the face of government spending cuts… seems that when left a little bit to themselves, the Greek people can actually do stuff.
http://www.bbc.co.uk/news/business-33908034
Read that sentence a few times.
If they can’t repay their loans, they must need emergency funding to cover the payments.
Coincidence that more debt, which is paid back not by those who borrowed and spent, but by the hapless taxpayers, is constantly touted as the next solution.
And then when corporations, the owners of which pay most of the taxes, try to reduce the burden on them, they use the methods of statism as well, thus expanding crony capitalism.
Then we’re told “See? This is why we need stronger government.”