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Paul Krugman = toast

Probably the most devastating take-down yet of the economist and leftist news columnist I have ever read. The man’s credibility is in total ruins. The stuff at the end about the housing bubble is the killer. Read the whole thing.

22 comments to Paul Krugman = toast

  • Great piece. The final paragraph

    “Krugman thinks he’s had the misfortune to be born a Professor Seldon in a world that does not give real power to such types. But he is more like Captain Ahab, leading his diminishing crew of followers on a doomed quest in search of the great white stimulus package that will redeem us or destroy us, but either way will finally silence all those doubting voices.”

    is the most amusing thing I have read in days!

  • Interesting piece, but it leaves out one important dummy variable (no pun intended): TimesSelect. I think all three of the Times’ neo-whackos (Krugman, Friedman and Brooks) found themselves having to become ever more outrageous just to get read during that asinine two-year experiment.

  • Laird

    I’m impressed that he had the fortitude to wade through all those Krugman articles and books. I would never have the stomach for it.

  • Stephen Spruiell has zero grasp of economics. The big flaw in his article is that it is not just Krugman that he is attacking, but about half the economists in the world. That is, about half the economists in the world agree with Krugman, that governments and central banks can, at least potentially, have a large measure of control over unemployment, inflation, etc (though obviously far from perfect control).

  • Johnathan Pearce

    The big flaw in his article is that it is not just Krugman that he is attacking, but about half the economists in the world. That is, about half the economists in the world agree with Krugman, that governments and central banks can, at least potentially, have a large measure of control over unemployment, inflation, etc (though obviously far from perfect control).

    I fail to see how an idea becomes wise just because, say, half of a group (like economists) believe in it. A lot of even supposedly smart folk can believe all manner of rubbish. Groupthink, etc. There is an awful lot of peer pressure in economics, particularly among those who want to get on in the profession. Read a lot of the crap I get from City analysts: the same stale, wrong rubbish.

    No, I think the dissection of PK was spot-on. It is striking to read how he once called for a housing bubble.

  • Philip Scott Thomas

    There are two people whose opinions I’d like to hear on this one: Paul Marks and Tim Worstall.

  • DBC Reed

    Krugman certainly has something to answer for in respect of housing bubbles but this site has always been sanguine about house price inflation and vociferously opposed to ways of controlling it while keeping up the supply of credit generally.

  • Gareth

    Like Jay Thomas I particularly liked the final paragraph, with one minor quibble. There is none so pious as a convert. Krugman’s search for the great white whale of a stimulus is not to redeem or destroy us, just him. For us it will have the opposite effect that it has on him.

  • john east

    Ralph,
    You say that half the world’s economists agree with Krugman, but then more than half of the world’s economists rely on the patronage of Wall St., big business, and the ruling elites of the West for their livelyhoods. These economists may well believe that deficit keynesianism can save us all, but is their agreement with this ideology based on economic wisdom, or self interest? Since failure on their part to toe the Keynesian line would be extremely damaging to their careers your belief in their integrity strikes me as perverse, or maybe you are an economist, which would explain your position.

    As for Krugman, who is feted regularly by the BBC, Bloomberg, CNN and CNBC, (which is a good enough reason in itself to doubt his impartiality), I may disagree with his pronouncements, but I am actually one of his biggest fans. Without the likes of Krugman my gold investments would almost certainly not have performed as well as they have done over the last decade.

    As a nonentity there is little that I can do to convince the world that Krugman is a shill for the Western elites, but I sure have profited from this knowledge.

  • Sigivald

    Ralph: Half the world’s economists (if not more) do, yes, believe that the State can affect unemployment and inflation. (Hell, I don’t think any economists deny that a central bank can affect inflation!)

    The idea being declaimed in the link, however, is not that states can affect both unemployment and inflation, but that more and more stimulus spending will produce more employment without dangerous inflation.

    Far, far fewer than half the world’s economists, as far as I can tell, believe in (nearly) unlimited non-harmful stimulus spending. Krugman is very much an outlier there.

    Remember that while his Nobel Prize is generally regarded as well-deserved, it was not on macroeconomics, central banking, unemployment theory, or inflation. It was given for his work on international trade, and does not reflect his qualifications in any other area of economic research or analysis.

    That earned aura of competence in one specialized sub-field of Economics does not transfer to other areas where the expertise is lacking.

    Krugman is, sadly, a political hack whenever he’s talking about anything in the Times, and any topic other than trade policy.

  • Paul Marks

    The subject of political economy was developed by people whose attention was attracted to the problem of why government efforts to control the economy had such terrible effects (i.e. they noticed empirical events) and they followed the approach of logical reasoning (a priori – not empirical) to try and find out WHY this was so.

    A good early example is Sir Dudley North – his work on trade (1690) which not only points out that government efforts to direct trade have bad effects (an empirical observation) but also explains how this MUST be so (the application of logical reasoning).

    Perhaps the best example is Richard Whately (and before anyone points it out I am no fan of some of his wrong headed theological/philosophical opinions – which have God inventing fire, the wheel and …..).

    Whately (who, quite correctly, thought the term Poltical Economy a bad one [“economics” – the science of the household is an even worse term, a society is NOT a household] suggesting the term “Catallactics” , the science of exchanges, instead) was not only a close observer of reality – he was also a first rate apriori logical reasoner.

    There is not contradiction between being both of these things.

    His lectures (among other things) point out the absurdity of the Labour Theory of Value (a few mistaken words by Adam Smith worked into a vast and FALSE theory by David Ricardo), but (contrary to what is thought now) many early 19th century thinkers pointed out that Ricardo’s work (supported by his friend James Mill and Mill’s son John Stuart Mill) was false.

    What Whately helped do was put the study of what we call economics on a sound philsophical basis.

    Whately was an Aristotelian (not in his doctrines about the world – but in his understanding of the rules of reasoning, even if [like all of us] he did not always apply those rules of reasoning to his own pet fancies), and it is no accident that Carl Menger was one also.

    Menger was lucky to live in Austria where the basic common sense rules of reasoning of Aristotle were not despised – unlike the rest of the German lands where scholars where proud of having moved beyond such things.

    Certainly Mises and the others were well read in Kant and others – but the core is certain basic common sense (Aristotelian) rules of reasoning.

    And for anyone who says Common Sense and Aristotelianism are different schools of philosophy – I did not use capital letters for common sense (and on the basic things I would argue that they are NOT so different anyway).

    Still back to Krugman and co.

    Economics a way of planning society – like Plato, accept with high tech tossed in like Asimov (of like Francis Bacon – “The New Atlantis”).

    All the fallacies of despotism – dressed up as science. Oh dear, how depressing.

    The very stuff that Political Economy was created to show was nonsense.

  • Paul H

    Just because economists use a lot of difficult maths does not make their subject a hard science like say physics is. It is still a social science and like all social scientists, economists polarise to the left and the right.

    Whenever I hear a politician or journalist listing all the “Senior economists” who agree with the point they are trying to make, it is amazing how consistantly they are all of the same side of the political spectrum as themselves.

    So Krugman is partisan you say, who knew?!

  • Paul H

    Just because economists use a lot of difficult maths does not make their subject a hard science like say physics is. It is still a social science and like all social scientists, economists polarise to the left and the right.

    Whenever I hear a politician or journalist listing all the “Senior economists” who agree with the point they are trying to make, it is amazing how consistantly they are all of the same side of the political spectrum as themselves.

    So Krugman is partisan you say, who knew?!

  • Robert Speirs

    I have been trying to think of one thing in economics that Krugman – and his half of all economists – have been right about, one policy prescription they’ve made that has worked. And I can’t. What does it say about a “science” when half its practitioners have never been right and always been wrong? I would compare them to psychiatrists, but they don’t even claim to know what “right” and “wrong” are. Now that I think of it, that may be PK’s great new insight in his next column: “There is no right or wrong in economics.”

  • PeterT

    As an aside.

    “Someday there will exist a unified social science of the kind that Asimov imagined,’ Krugman wrote, ‘but for the time being economics is as close to psychohistory as you can get.”

    Economics is a young science. But it is not inconceivable that one day we will be able to understand and predict the economic behaviour of individuals and aggregate it up. That is, economists will have the tools at their disposal to become the kind of social engineers that Krugman wishes to be. This is the ‘dark side’ of economics. Hayek and Smith had a respect for the individual that many economists do not. Even if they had not believed that free markets were the best markets it is unlikely that they would have favoured a dirigiste economy. One of the best selling points of free market economics is that it is also the most efficient at maximising wealth. I dread the day when the knowledge and technology exists to actually make reasonably efficient top down decisions.

  • Paul Marks

    For those not fond of long comments I will make a shorter one.

    As the article points out – Paul Krugman changes his position and his line of attack as the wind changes. Not “as the facts change” (that was B.S. when Keynes claimed it – and it is still is), but rather when is to his political advantage.

  • Rich Rostrom

    You might want to fix the link so it points to the first page of the article, instead of the fifth page.

  • Better yet, link to the print version so we don’t have to click on all five pages separately.

  • Johnathan Pearce

    Sorry, I am not changing the link. I wanted to put up the page that contains the killer quote at the end. All readers have to do is scroll back a few pages to the start; it takes about 10 seconds.

  • Kevin B

    I thought Bill Whittle on his latest “What We Believe” video had a good stab at explaining the problems with government control snd economic planning.

    Basically, you can never know enough to achieve it.

    (Link)

  • That is, about half the economists in the world agree with Krugman, that governments and central banks can, at least potentially, have a large measure of control over unemployment, inflation, etc (though obviously far from perfect control).

    We know they certainly can have a negative effect on those things, so…

  • Paul Marks

    Yes Paul, indeed in the long run (and we are very near it now – even though you are dead Lord Keynes) governments and “economists” who see themselves as planning and controlling the world, can only have a negative effect.