Alas, Krugman ran into Jamie Galbraith, who is not susceptible to Paul’s edicts of intimidation. Jamie’s piece is wonderfully concise and should be savored in its entirety. But here are the two key takeaways. Jamie destroyed the Gang of 4 and Krugman. Jamie made two simple points. First, Friedman is a supporter of Hillary Clinton, not Bernie. That means there is every reason to believe he did not engage in “voodoo” economics as Krugman charged in order to help Bernie. It also means that Paul’s demand: “Sanders needs to disassociate himself from this kind of fantasy economics right now” is bizarre. Why would Sanders need to disassociate himself from a Hillary supporter?
Second, Friedman’s study is utterly conventional in terms of the macro models that Krugman has been praising for years in his column. The results he calculates, that Krugman dismisses as “fantasy” and “voodoo” are in fact the normal product of the normal models Krugman and the Gang of 4 rely on. Friedman, Jamie, and I all have many doubts about those models, but not Krugman and the Gang of 4. Why does the standard model generate such powerful results for employment and growth? It does so because Bernie’s plan to spur the economy is far larger than current policies or anything program to spur the economy supported by Hillary…/
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That’s how the Gang of 4 leads, and those two sentences are an enormous “tell” in the sense that word is used in poker. They are not attacking him for the model he used, they are not attacking him for his inputs, and they are not attacking him for a computation error. They are attacking him because their own models predict that Bernie’s plan would produce “huge beneficial impacts.” To state what should be obvious to any economist, much less the Gang of 4 and Krugman, that is not a logical criticism of Friedman or Bernie. The Gang of 4 and Paul’s criticisms are historical. When modest economic measures are taken to spur growth we observe only modest impacts on growth. That is not a logical argument against Friedman modelling Bernie’s proposals.…
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The Gang of 4 then evince another tell. They decry the fact that the standard models predict “huge beneficial impacts” from Bernie’s plan because the use of standard models “undermines our reputation as the party of responsible arithmetic.” The concept of “responsible arithmetic” is wondrous. Notice that they do not claim that Friedman’s “arithmetic” is inaccurate in the sense of making a computational or data input error. Nor do they attack his use of the conventional models they embrace. No, their criticism is that they hate the results of Friedman’s accurate arithmetic. They point out no errors in Friedman’s arithmetic. There is no indication that they ever checked out the accuracy of how he modeled the impacts of Bernie’s plans.
This means, as Jamie Galbraith observes, that the Gang of 4 and Krugman have smeared Friedman and Bernie.…
Jamie Galbraith called the Gang of 4 and Paul out on their smear and their disgusting effort to substitute “authority” for logic, integrity, and intellectual honesty. The effort to use authority to destroy Friedman’s reputation, with no identification of a single arithmetic mistake in using their own models is reprehensible. The Gang of 4 and Krugman should retract their letter and blogs and personally apologize to Friedman. It is despicable to abuse authority and status.Much more in the full post. Ya gotta love Sheriff Bill.
New Economic Perspectives
Krugman and the Gang of 4 Need to Apologize for Smearing Gerald Friedman
William K. Black | Associate Professor of Economics and Law, UMKC
Krugman and the Gang of 4 Need to Apologize for Smearing Gerald Friedman
William K. Black | Associate Professor of Economics and Law, UMKC
Here's Krugman from 2003:
ReplyDeleteThere is now a huge structural gap — that is, a gap that won't go away even if the economy recovers — between U.S. spending and revenue. For the time being, borrowing can fill that gap. But eventually there must be either a large tax increase or major cuts in popular programs. If our political system can't bring itself to choose one alternative or the other — and so far the commander in chief refuses even to admit that we have a problem — we will eventually face a nasty financial crisis.
The crisis won't come immediately. For a few years, America will still be able to borrow freely, simply because lenders assume that things will somehow work out.
But at a certain point we'll have a Wile E. Coyote moment. For those not familiar with the Road Runner cartoons, Mr. Coyote had a habit of running off cliffs and taking several steps on thin air before noticing that there was nothing underneath his feet. Only then would he plunge.
What will that plunge look like? It will certainly involve a sharp fall in the dollar and a sharp rise in interest rates. In the worst-case scenario, the government's access to borrowing will be cut off, creating a cash crisis that throws the nation into chaos.
[Paul Krugman, New York Times, 10/14/2003 http://www.pkarchive.org/column/101403.html]
It's now twelve years later and rising interest rates and falling dollar are the least of our worries.
See Is Paul Krugman Ever Wrong?
Dan they are AAAAALLLLLL morons...
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