Krugman's Intellectual Waterloo (Liberal Economist 2008 Nobel prize winner exposed)

Mises Institute ^ | 6/22/2009 | Lilburne

[sickoflibs]

Last Monday evening, Lew Rockwell, from a tip by someone named "Travis," posted this damning quote of Paul Krugman's from a 2002 New York Times editorial:

"To fight this recession the Fed needs…soaring household spending to offset moribund business investment. [So] Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble."

Krugman. 2002. Calling for a housing bubble.

What's more, by explicitly calling for a new bubble to replace the recently burst one, he anticipated by 6 years the Onion's hilarious "report" that "demand for a new investment bubble began months ago, when the subprime mortgage bubble burst and left the business world without a suitable source of pretend income." Except Krugman was being serious.

The quote caught on in the blogosphere, to such an extent that Krugman actually responded in his New York Times blog Wednesday morning:

"Guys, read it again. It wasn't a piece of policy advocacy, it was just economic analysis. What I said was that the only way the Fed could get traction would be if it could inflate a housing bubble. And that's just what happened."

So with a deft little two-step, Krugman paints himself as a doctor who gave an excellent diagnostic, and not a disastrous prescription. One of his ditto-heads posted on his blog that saying Krugman advocated or caused the housing bubble was "Like saying Nostradamus caused the rise of European fascism."

The Lone GunmenAt the same time, with his headline of "And I was on the grassy knoll, too" he paints his critics (especially the Austrians) as conspiracy theorists, akin to the Lone Gunmen (the Kennedy-assassination theorists from the X-Files TV show). Just like with the matter of Jekyll Island and the events leading up to the creation of the Fed, an obvious conclusion from a matter of public record is portrayed by establishment sophistry as unmoored crankiness. And once again, it works: another ditto-head dismissively remarked "no need to reason with those folks."

Even economist Arnold Kling bent over backwards to interpret the column in a benign light:

"He was not cheerfully advocating a housing bubble, but instead he was glumly saying that the only way he could see to get out of the recession would be for such a bubble to occur."

Krugman thanked Kling for his "gracious, sensible explication". I can just imagine Kling running around his office in glee at having been nodded at by a celebrity Nobel Laureate, exclaiming, "He likes me! He likes me!"

Mark Thornton on the Mises blog followed up with a devastating collection of 2001 Krugman quotes clearly documenting his support for inducing a housing bubble. The most damning of this batch is the following from a 2001 interview with Lou Dobbs:

"Meanwhile, economic policy should encourage other spending to offset the temporary slump in business investment. Low interest rates, which promote spending on housing and other durable goods, are the main answer. "

How the hell can anyone spin that as a purely academic musing, and not a policy recommendation for artificially inducing housing spending?

Ignoring the other quotes for a moment, and just judging from the 2002 column, did Krugman support pumping up a housing bubble or not? Given that, even in his recent blog defending himself, he explicitly stated his belief that "the only way the Fed could get traction would be if it could inflate a housing bubble," there are only two possibilities:

1.He did not support inducing a housing bubble, and wanted the Fed to not fight the recession.

2.He did support inducing a housing bubble.

Anyone even somewhat familiar with Krugman's attitude toward Fed activism should know that proposition #1, that Krugman supported a do-nothing policy, is preposterous. So, especially after bringing back in the quotes gathered by Mark Thornton, the case for proposition #2 is overwhelming.

And what about his strawman protests that he didn't cause the housing bubble, much less the Enron scandal or Kennedy's assassination? The man is willfully missing the point. What is damning about these quotes is not that he necessarily caused anything. What is devastating about them is that they expose the intellectual bankruptcy of his economic principles. Those who look up to him like the second coming of Adam Smith should realize that the neo-Keynesian principles that lead him to advocate aggressive interest-rate cuts and mammoth public spending now, are the very same principles that led him to advocate inducing a housing bubble then. He would himself affirm that his economic principles haven't fundamentally changed since then. So the conclusions and policy prescriptions he infers from them are just as wildly wrong now as they were then.

[sickoflibs]

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[pissant]

Lew Rockwell is still alive?

[sickoflibs]

The Peter Schiff/Redistribution Watch Ping. (Washington Bankrupting our Nation by Spending your past, present and future money!)

This man is worshipped at MSNBC and wins the Nobel Prize for crap.

[PGalt]

Thanks for posting. This small-minded, bearded bean counter is no economist.

[PGR88]

Krugman is a politician pretending to be a scientist.

[Rocky]

Who was it who said, “If you lined up all the economists end to end, they would still point in every direction.”?

One of the free things in life is an economic opinion. Everybody has one. Some people get paid for expressing theirs. It doesn’t mean their opinion is better than that of the homeless guy drinking behind the dumpster.

[RightOnTheLeftCoast]

http://eviscera.blogspot.com/2005/04/paul-krugman-is-one-man-circle-jerk.html

Paul Krugman is a One-Man Circle-Jerk

An Academic Question
By PAUL KRUGMAN

Published: April 5, 2005

It's a fact, documented by two recent studies, that registered Republicans and self-proclaimed conservatives make up only a small minority of professors at elite universities. But what should we conclude from that?

Conservatives see it as compelling evidence of liberal bias in university hiring and promotion. And they say that new 'academic freedom' laws will simply mitigate the effects of that bias, promoting a diversity of views. But a closer look both at the universities and at the motives of those who would police them suggests a quite different story.

[snip]

One answer is self-selection - the same sort of self-selection that leads Republicans to outnumber Democrats four to one in the military. The sort of person who prefers an academic career to the private sector is likely to be somewhat more liberal than average, even in engineering.

But there's also, crucially, a values issue. In the 1970's, even Democrats like Daniel Patrick Moynihan conceded that the Republican Party was the "party of ideas." Today, even Republicans like Representative Chris Shays concede that it has become the "party of theocracy."

[snip]

Scientific American may think that evolution is supported by mountains of evidence, but President Bush declares that "the jury is still out." Senator James Inhofe dismisses the vast body of research supporting the scientific consensus on climate change as a "gigantic hoax." And conservative pundits like George Will write approvingly about Michael Crichton's anti-environmentalist fantasies.

[snip]

Conservatives should be worried by the alienation of the universities; they should at least wonder if some of the fault lies not in the professors, but in themselves. Instead, they're seeking a Lysenkoist solution that would have politics determine courses' content.

And it wouldn't just be a matter of demanding that historians play down the role of slavery in early America, or that economists give the macroeconomic theories of Friedrich Hayek as much respect as those of John Maynard Keynes. Soon, biology professors who don't give creationism equal time with evolution and geology professors who dismiss the view that the Earth is only 6,000 years old might face lawsuits.

If it got that far, universities would probably find ways to cope - by, say, requiring that all entering students sign waivers. But political pressure will nonetheless have a chilling effect on scholarship. And that, of course, is its purpose.

Oh, man, this guy makes my head hurt.

First, in a spasm of oratorical onanism, he flatters himself by implying that academics, through a process of intellectual self-selection, today represent some sort of awesome-brained uber-species of hominid, much as knuckle-dragging Republicans have grunted and scratched their way into populating the ranks of the brutish military. Well, if one accepts this basic thesis, then perhaps Krugman stands as testimony to the dangers of inbreeding, for Mr. Enron Advisor stands prominently as perhaps the economist most associated with the longest and broadest train-wreck of a professional record. Where else could the likes of Krugman achieve gainful employment than in academia, where accountability is too often a foreign concept? Are this guy and the New York Times a match or what?

Then he delves into "values", citing no less than charter RINO Chris Shays in indicting the Republican Party as no longer a "party of ideas". Okay, Paul, in your own words or less, name some essential Democrat ideas of the past decade:

...waiting...

...waiting...

Aw, hell, let me help: there aren't any. Higher taxes, more dependency and a bigger nanny-state pretty much round out an idea-free agenda anchored on infanticide, buggery, dictator-licking and obstructionism for that faded Party, when they aren't claiming credit for Republican initiatives like welfare reform, that is.

Then, rapid-fire, he starts in with a lefty Clif's Notes version of claimed Republican pseudoscience. These, like his economics and his Enron advice, he gets rather wrong. Sure, Bush says the jury is still out on "evolution", because it is, especially regarding certain of the more ambitious aspects of the theory: One doesn't have to be a Young Earther to have difficulties with the many hoaxes that have crept into the fossil record, and one needn't be a fundamentalist to see striking parallels between Genesis and the Big Bang theory. Meanwhile, Inhofe and Crichton et fils don't necessarily deride the "vast body of research" supporting the "scientific consensus" on "climate change"... rather, they'll point out that the first two are not as monolithic as Krugman holds (and I note his expertise in atmospheric physics approaches that of his Enronomics), but mostly Inhofe and Crichton et fils focus their debunking not so much on "climate change" as on the Left's leap to judgment of human activity (and especially American activity) at its root.

And nice touch, Paul, in aligning Keynes vs. Hayek with "scientific consensus on climate change" vs. loony wild-eyed fundamentalist creationists. Did you counsel Enron on subtlety too?

Meanwhile, if any reader wants to see a "chilling effect on scholarship," try admitting you're a Republican on any major campus today.

[PGalt]

Well-stated. Thanks for posting.

[M. Dodge Thomas]

Rockwell needs to re-calibrate his irony meter.

[JerseyJohn61]

Exactly PG.

Krugman is nothing more than a Marxist activist
masquerading as an economist.

JJ61

[Rodebrecht]

Ron Paul is associated with the Ludwig von Mises Institute. Therefore, they’re a bunch of kooks...

[PGalt]

Thanks for posting. Insight into the small-minded, bird-brained (apologies to birds) bearded bean counter

[GOPJ]

What is devastating about them is that they expose the intellectual bankruptcy of his economic principles. Those who look up to him like the second coming of Adam Smith should realize that the neo-Keynesian principles that lead him to advocate aggressive interest-rate cuts and mammoth public spending now, are the very same principles that led him to advocate inducing a housing bubble then.

Great post sickoflibs.

[SnuffaBolshevik]

I can just imagine Kling running around his office in glee at having been nodded at by a celebrity Nobel Laureate, exclaiming, "He likes me! He likes me!"

Uh, Kling....Can we have the feather duster back?

[sickoflibs]

RE :”Ron Paul is associated with the Ludwig von Mises Institute. Therefore, they’re a bunch of kooks...”

LOL, And your voices of wisdom ARE? You like Mark Levin?

[Intolerant in NJ]

Krugman - a dismal master of a dismal “science”......

[Rodebrecht]

I forgot the sarcasm tag. Because, you know, there are those around who decry anything to do with Ron Paul.

[sickoflibs]

Thanks,

Superior Liberal Krugman and his worship at NBC annoys me to NO end, and I am hardly a Republican party robot or supporter.

[sickoflibs]

I see him on NBC and he annoys me to no end so smug and superior.

To be fair our‘conservative talk radio (Rush, Hannity, Levin )’ got it wrong too BUT they are continually ridiculed by the elite yet in comparison this liberal phony gets an award and is worshiped for his crap theories because he promotes big government and Obama.

[forest153]

Oh my goodness what an amazing article!!!! Freepers Rule!!! Thank you sickoflibs. I have to tell you that months back I built two perches one next to the Supreme Court and another by King Krugman’s Conscience of a Liberal. The Supreme Court I watch like a hungry hawk and once in a while I fly over to Krugman’s place land and turn into a harpy. I have yet to get a comment past mediation but I would bet the folded up 20 dollar bill in my shoe that the ‘folks’ over at NYT are putting them on his desk. His ignoble crown was bestowed on him in August 2008 so he would provide a steady stream of ‘substantiated by a Nobel Prize Laurette in economics’ for the shenanigans that started in September 2008. Volker started a little mutual admiration club for Krugman and Geithner called the Gang of 30. It isn't a conspiracy, its just embarrassing.