Is It Intellectually Honest to Chortle About This?
Major Freedom tipped me off to this Bloomberg interview with Krugman, which aired in March 2017:
So in the interview, Krugman says 3% growth is not possible, even if they made him dictator. (Really.) Krugman goes on to say that 2% growth is the reality we now face, for various reasons (like demography), unless there is a productivity “miracle” which no one knows how to engineer through policy.
The reason people on reddit are mocking this, of course, is that the latest GDP numbers show 4.1% quarterly growth, but even year/year it’s 2.8%.
So my question: Is this yet another example of Krugman being wildly wrong in his prognostications? Or in context, did he mean in the interview that 3% sustained growth over the next decade (say) was impossible?
More specifically: At what point would even Krugman’s defenders admit he was wrong? (Note well, I too am worried about a crash as the Fed hikes rates, so I’m not saying I am optimistic about the future. But I *do* think Krugman doesn’t understand how much marginal tax rate reductions can boost growth.)
This Krug-man is slippery. Slippery like an especially slippery eel.
He can claim that he underestimated the effect that the reduction in unemployment would have. I mean obviously if you have *that many* people go back to work that’s going to drive an increase in GDP. He just didn’t realize there were that many people to go back to work as the numbers were off or something.
It might take a 1200 word column full of charts, graphs, and assertions but I’m confident he can do it.
Krugman does say “sustainable growth,” as does the interviewer, so I think it’s clear he’s talking about longer run growth rates, not just a given quarter or even a given year. I do think he’s wrong about not being able to raise growth rates through policy, but I don’t think the recent GDP numbers show he was wrong.