Skip navigation

Finally, here’s an article that properly articulates what I feel about Paul Krugman. http://faculty.chicagobooth.edu/john.cochrane/research/papers/krugman_response.htm#

Usually, to properly understand an issue, I try to read a left-wing and a right-wing perspective on things. For a right-wing perspective, I’ve been reading the Becker-Posner blog. It features one of the people I most respect, Judge Richard Posner who is variously a leading law and economics scholar, professor of law at Chicago Law School, a professor of economics at in the one and only Chicago School of Economics and a judge on the (Federal) 2nd Circuit Court of Appeals. Each week, Posner and Becker each write a post on the same topic which gives a vigorous insight into different (right-wing) perspectives on that topic.

Although Posner and Becker don’t always source their ideas, its always clear that certain economic models exist in the background. They outline their logic in explaining how and why they believe a certain thing. Even if you disagree with them, you can at least follow their steps and point out where the went wrong. And if you disagree with them, you will have to do something a bit more rigourous than say – oh, Posner, he’s Chicago school. He would say that!

Unfortunately, supposed Nobel Laureate Paul Krugman does exactly that. Krugman fails to articulate why he believes a certain thing – aside from asserting that he does. Reading his NYT column occasionally, he continually asserts that he believes the US stimulus package wasn’t big enough (and, now that the stimulus package is wearing out, he’s claiming he was right all along). And doing a quick historical search, I was unable to even find the article where he originally asserted that the stimulus package wasn’t big enough and why. All he gives us is the fact that “his model” says its not big enough. Well, frankly, that’s just not good enough. Yes, he’s a Nobel Laureate but we cannot simply rely on titles to let us do our work for us. Besides, it seems that he was one of those political Nobel Committee choices. I remember when he first received the award, my game theory lecturer mentioned that it was surprising because (despite his fame as a NYT columnist) he actually had quite a thin academic portfolio. He hadn’t written much outside his specialisation of New Trade Theory and not all that much within it.

And Paul Krugman is the master of the ad hominem attack, as the linked article details. And yet, his own writing falls far short of the mark. Krugman occasionally does give economic justifications for his beliefs – but its always at such a simple level he might as well not have done so. When he says that further stimulus (QE2) will not cause inflation, he merely states this is because “his model” (a phrase he uses far too often) states that this feeds into investors’ inflationary expectations which is exactly what is needed to kick start the economy.

Krugman does a disservice to the entire economics profession. Moreover, he does a disservice to Keynesians the world over. For those, like me, who rely on him to give a rigourous and reasoned defence of Keynesianism, he fails utterly. Instead, he gives a completely political answer – lobbing attack lines like any seasoned Republican or Democrat senator. And thus, in the result, I have come to accept the Chicago school of economic thought far more than the Keynesian school. In many ways, I find it quite disappointing.

PS: I should add that much of what Krugman talks about is in the area of macroeconomics, whereas Posner/Becker talk about both microeconomics and macroeconomics. I have always said that microeconomics is my strong suit. Macroeconomics is too riven with uncertainty for my tastes. Another good source for a right-wing economic understanding of macroeconomics is Alan Greenspan’s excellent autobiography. I have yet to find a good left-wing source. Perhaps it does not exist. Perhaps Joe Stiglitz is a better source.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: