Economist Paul Krugman Ignores Own Advice
For a winner of the Nobel Prize in Economics, Paul Krugman tends to rely far too much on attacking the motives of his political opposition, and avoiding the hard facts refuting his own stances. His newest column is a perfect example of this.
In the column, Krugman makes several claims that are demonstrably false:
- He says governments have “cut investments.” No such cuts have taken place.
- Krugman claims “austerity economics” has collapsed “as a policy doctrine.” His ideology is masking the truth.
- Throughout the op-ed, Krugman says the plight of the jobless is being ignored by policymakers. While this is true of the Obama Administration and certain others, reducing the debt burden on America would actually improve the economy for those currently unemployed or employed part-time. So, most of the time, so-called “deficit hawks” are also “unemployment hawks.”
- Krugman asks “where’s that runaway inflation [monetary hawks] promised?” He answered his own question some time ago in another column.
From the top:
While it may be true that some governments in America have “cut investments,” overall spending in America’s governmental systems (local, state, and federal) has risen since the start of the recession. From Just Facts:
The Great Recession lasted from December 2007 through June 2009, and from 2007 to 2009, the portion of the U.S. economy consumed by local, state, and federal governments increased by 17%. This higher level of spending was supposed to be a temporary response to the recession that would speed recovery, but in 2012, government was still consuming 9% more of the U.S. economy than in 2007, and the economy was still sputtering.
If “investments” aren’t taking place, it’s not because of a lack of funding. It may be because of the hundreds of billions of dollars in fraud, waste, improper payments, and duplication in the federal government, or deficits at the Senate barbershop, or corporate and congressional welfare in the farm bill. It’s certainly not because of “cuts” in federal spending.
Next up, the “austerity” that never existed (Krugman is referencing the Reinhart-Rogoff controversy from earlier this year) has, in fact, been supported by its harshest critics. From Roll Call, it turns out the Harvard researchers who first led to massive critiques of Reinhart-Rogoff found the following:
…Reinhart-Rogoff’s paper expects a 1.2 percent drop in economic output per year at 90 percent of GDP, while Herndon, Ash and Pollen [the researchers) say the percentage is about 1 percent at 90 percent of GDP. These are quite similar findings overall.
Given his Nobel Prize in Economics, it is surprising Krugman either did not read both reports to understand this stark similarity, or did not understand it. The only other conclusion is that he is being intentionally dishonest.
Moving on, Krugman also says those who are “deficit hawks” aren’t serious about reducing unemployment. While this is true for some in Washington, most who want less debt recognize the reality that America’s high debt equals fewer jobs. Furthermore, a Bloomberg report shows millionaires received $30 million in unemployment benefits in 2010. Would Krugman consider cutting that harmful to the employment rate? What about the nearly one million households making over $100,000 annually that received benefits in 2009?
Furthermore, as Heritage Labor Policy expert James Sherk pointed out at the above link, current unemployment benefits are de facto dependency on the government given all the extensions in recent years. Furthermore, according to Sherk, the longer people are on benefits, they tend to stay unemployed longer. So, again, deficit hawks really are unemployment hawks as well.
Finally, Krugman writes that there hasn’t been the inflation many fiscal conservatives have warned about. Yet in a column on May 3, 2013, he explained exactly why:
So why is inflation falling? The answer is the economy’s persistent weakness, which keeps workers from bargaining for higher wages and forces many businesses to cut prices.
In other words, Krugman is saying in his newest column that unemployment is high, and that’s bad, and high inflation hasn’t happened like alarmists said it would. Yet just five weeks ago, he pointed out that the economy’s weakness is keeping inflation low. Which means Krugman is trying to have his cake and eat it, too.
As the economy continues to sputter and debt continues to grow, Krugman’s obfuscation of the facts surrounding these issues is becoming more and more harmful. His refusal to acknowledge the problems threatening the long-term viability of our economy misleads a large number of people regarding their own future economic security.