It is safe to say that Paul Krugman is much smarter than I am, and that he understands more economics than I do. He generates a great deal of incisive analysis about the economy, and has often had a gift for stabbing straight through to the one underlying piece of data that gives lie to an otherwise plausible economic theory.
I want to get that out of the way, because otherwise my readers (left and right) might assume that this post is a "libertarian economics blogger makes fun of liberal economist's poor reasoning skills" special, and that's not at all why I'm writing it. Paul Krugman is a brilliant and interesting analyst. He also, like everyone else, can be wrong.
There's an interesting phenomenon that often happens when I blog something critical of Paul Krugman: some of his bigger fans turn up in my comments to argue that I am not worthy to talk, because Paul Krugman is a brilliant insightful analyst who has forgotten more economics than I will ever learn--all undoubtedly true. Over and over, they say, Paul Krugman gets it right when other commentators get it wrong. And as proof of this rare perpicacity, they offer the fact that . . . Paul Krugman called the housing bubble in May 2005.
There is rich irony in the belief that Paul Krugman must be right, and I must be wrong, because he had the foresight to call the housing bubble. That's because I saw it in 2002. As you can see, I blogged quite a bit about it before Paul Krugman wrote his first column on the topic. Neither of us, as far as I can tell, understood what that meant for the financial system. But both of us saw it coming, me a little sooner.
This is not that surprising, actually. Lots of people saw it coming. You hear people asking a lot where the financial journalists were--how they could have missed the housing bubble--and the answer is that they didn't! The Economist was writing about it even before I did, thanks to Pam Woodall, the brilliant economics editor who really may have been the first commentator to identify the global phenomenon. Housing bubble stories and op-eds regularly appeared in newspapers like, well, The New York Times. But most people weren't reading the financial press (or this blog) in 2005, and so when they discover that Paul Krugman was writing about the housing bubble way back then, it seems like amazing foresight.
Meanwhile, today I stumbled across another example of Paul Krugman's "foresight", via David Henderson. Chris Alden, a co-founder of Red Herring, blogs about an article Krugman wrote for them back in the 1990s:
He went on to make some specific predictions, all of which were either mostly or completely wrong:
"Productivity will drop sharply this year."
Nope - didn't happen. In fact productivity continued to improve, as this chart shows:
"Inflation will be back. ...In 1999 inflation will probably be more than 3 percent; with only moderate bad luck--say, a drop in the dollar--it could easily top 4 percent."
"Within two or three years, the current mood of American triumphalism--our belief that we have pulled economically and technologically ahead of the rest of the world--will evaporate."
Nope -- that didn't happen, either. Though September 11th, which happened more than three years after this article, and the Lehman Brother's collapse, which happened more than 10 years after this article was written, have certainly reduced American triumphalism. Here is where I think Krugman may have been the most right, albeit it way too early.
"The growth of the Internet will slow drastically, as the flaw in 'Metcalfe's law'--which states that the number of potential connections in a network is proportional to the square of the number of participants--becomes apparent: most people have nothing to say to each other!
By 2005 or so, it will become clear that the Internet's impact on the economy has been no greater than the fax machine's."
"As the rate of technological change in computing slows, the number of jobs for IT specialists will decelerate, then actually turn down; ten years from now, the phrase information economy will sound silly."
"Sometime in the next 20 years, maybe sooner, there will be another '70s-style raw-material crunch: a disruption of oil supplies, a sharp run-up in agricultural prices, or both."
Meh. While have seen oil prices spike (although they have yet to reach the annual peak we saw in 1980), this was not due to a crunch or disruption or running out of oil) but rather growth in demand.
I'm inclined to be more charitable than Alden on a couple of these, but there's no question that Krugman got some things really, really wrong.
But it doesn't follow that Krugman is an idiot who should get no respect--any more than calling the housing bubble made him an infallible genius. Krugman remains a giant intellect who is well worth reading on virtually any economic topic. He is also capable of being badly wrong about things.
You often hear people complain that pundits or analysts aren't punished for getting things wrong. But this is why they aren't: everyone gets things wrong. The question "How can you expect us to listen to Pundit Y when he got everything wrong, and our guy called things correctly" only reveals that the person asking it has managed to forget all the blunders "our guy" made.
What pundits give you is not a perfect map of the future--the only people who succeed in that are characters in historical novels written by an author who already knows what happened. What's important is their thought process--do they point you to arguments you hadn't considered? Do they find data you ought to know about? Do they force you to challenge your own decisions?
Paul Krugman succeeds on that score, even if his crystal ball is a little cloudy.
Today’s empires are born on the web, and exert tremendous power in the material world.
Mark Zuckerberg hasn’t had the best week.
First, Facebook’s Free Basics platform was effectively banned in India. Then, a high-profile member of Facebook’s board of directors, the venture capitalist Marc Andreessen, sounded off about the decision to his nearly half-a-million Twitter followers with a stunning comment.
“Anti-colonialism has been economically catastrophic for the Indian people for decades,” Andreessen wrote. “Why stop now?”
After that, the Internet went nuts.
Andreessen deleted his tweet, apologized, and underscored that he is “100 percent opposed to colonialism” and “100 percent in favor of independence and freedom.” Zuckerberg, Facebook’s CEO, followed up with his own Facebook post to say Andreessen’s comment was “deeply upsetting” to him, and not representative of the way he thinks “at all.”
By announcing the first detection of gravitational waves, scientists have vindicated Einstein and given humans a new way to look at the universe.
More than a billion years ago, in a galaxy that sits more than a billion light-years away, two black holes spiraled together and collided. We can’t see this collision, but we know it happened because, as Albert Einstein predicted a century ago, gravitational waves rippled out from it and traveled across the universe to an ultra-sensitive detector here on Earth.
This discovery, announced today by researchers with the Laser Interferometer Gravitational-wave Observatory (LIGO), marks another triumph for Einstein’s general theory of relativity. And more importantly, it marks the beginning of a new era in the study of the universe: the advent of gravitational-wave astronomy. The universe has just become a much more interesting place.
Once it was because they weren’t as well educated. What’s holding them back now?
Though headway has been made in bringing women’s wages more in line with men’s in the past several decades, that convergence seems to have stalled in more recent years. To help determine why, Francine D. Blau and Lawrence M. Kahn, the authors of a new study from the National Bureau of Economic Research parse data on wages and occupations from 1980 to 2010. They find that as more women attended and graduated college and headed into the working world, education and professional experience levels stopped playing a significant role in the the difference between men and women’s wages. Whatever remains of the discrepancy can’t be explained by women not having basic skills and credentials. So what does explain it?
By mining electronic medical records, scientists show the lasting legacy of prehistoric sex on modern humans’ health.
Modern humans originated in Africa, and started spreading around the world about 60,000 years ago. As they entered Asia and Europe, they encountered other groups of ancient humans that had already settled in these regions, such as Neanderthals. And sometimes, when these groups met, they had sex.
We know about these prehistoric liaisons because they left permanent marks on our genome. Even though Neanderthals are now extinct, every living person outside of Africa can trace between 1 and 5 percent of our DNA back to them. (I am 2.6 percent Neanderthal, if you were wondering, which pales in comparison to my colleague James Fallows at 5 percent.)
This lasting legacy was revealed in 2010 when the complete Neanderthal genome was published. Since then, researchers have been trying to figure out what, if anything, the Neanderthal sequences are doing in our own genome. Are they just passive hitchhikers, or did they bestow important adaptations on early humans? And are they affecting the health of modern ones?
The city has filed a suit demanding $500 in payment for emergency treatment for the boy after a police officer fatally shot him.
Updated on February 11 at 2:34 p.m.
What’s more outrageous than having a police officer shoot an unarmed 12-year-old, failing to provide medical care, keeping his family forcibly from the scene, and then declining to indict the officer for the death? In most cases, little. But the city of Cleveland has found a way: It is suing Tamir Rice’s family for not paying the ambulance bill after a Cleveland cop shot and killed the boy in November 2014.
As the Scene reports, Cleveland has filed a claim in probate court, seeking $500 from Rice’s estate to pay for emergency medical services rendered after Officer Timothy Loehmann fatally shot the boy. The charge is especially galling because Loehmann and another officer apparently had no training or equipment to provide aid to Rice after they shot him. They did nothing for four minutes until an FBI agent who happened to be nearby took over.
If Bernie Sanders is serious about a political transformation in America, he needs a better plan.
If there’s one thing that fires up Bernie Sanders supporters—and makes his detractors roll their eyes—it’s his call for a “political revolution.” To his base, it’s the very point of his anti-establishment, anti-elite candidacy. To his critics, it’s the very embodiment of his campaign’s naïve impracticality and vagueness.
But now that voters in Iowa and New Hampshire have spoken, it’s time to take the idea of political revolution more seriously—more seriously, indeed, than Sanders himself appears to have. It’s time to ask: What exactly would it take?
It starts with Congress. And here it’s instructive to compare Sanders and Donald Trump. Both rely on broad, satisfying refrains of “We’re gonna”: We’re gonna break up the big banks. We’re gonna make Mexico build the wall. We’re gonna end the rule of Wall Street billionaires. We’re gonna make China stop ripping us off.
When four American women were murdered during El Salvador’s dirty war, a young U.S. official and his unlikely partner risked their lives to solve the case.
On December 1, 1980, two American Catholic churchwomen—an Ursuline nun and a lay missionary—sat down to dinner with Robert White, the U.S. ambassador to El Salvador. They worked in rural areas ministering to El Salvador’s desperately impoverished peasants, and White admired their commitment and courage. The talk turned to the government’s brutal tactics for fighting the country’s left-wing guerrillas, in a dirty war waged by death squads that dumped bodies in the streets and an army that massacred civilians. The women were alarmed by the incoming Reagan administration’s plans for a closer relationship with the military-led government. Because of a curfew, the women spent the night at the ambassador’s residence. The next day, after breakfast with the ambassador’s wife, they drove to San Salvador’s international airport to pick up two colleagues who were flying back from a conference in Nicaragua. Within hours, all four women would be dead.
The number of American teens who excel at advanced math has surged. Why?
On a sultry evening last July, a tall, soft-spoken 17-year-old named David Stoner and nearly 600 other math whizzes from all over the world sat huddled in small groups around wicker bistro tables, talking in low voices and obsessively refreshing the browsers on their laptops. The air in the cavernous lobby of the Lotus Hotel Pang Suan Kaew in Chiang Mai, Thailand, was humid, recalls Stoner, whose light South Carolina accent warms his carefully chosen words. The tension in the room made it seem especially heavy, like the atmosphere at a high-stakes poker tournament.
Stoner and five teammates were representing the United States in the 56th International Mathematical Olympiad. They figured they’d done pretty well over the two days of competition. God knows, they’d trained hard. Stoner, like his teammates, had endured a grueling regime for more than a year—practicing tricky problems over breakfast before school and taking on more problems late into the evening after he completed the homework for his college-level math classes. Sometimes, he sketched out proofs on the large dry-erase board his dad had installed in his bedroom. Most nights, he put himself to sleep reading books like New Problems in Euclidean Geometry and An Introduction to Diophantine Equations.
Why the Syrian war—and the future of Europe—may hinge on one city
This week, the Syrian army, backed by Russian air strikes and Iranian-supported militias including Hezbollah, launched a major offensive to encircle rebel strongholds in the northern city of Aleppo, choking off one of the last two secure routes connecting the city to Turkey and closing in on the second. This would cut supplies not only to a core of the rebellion against Syrian President Bashar al-Assad, but also to the city’s 300,000 remaining civilians, who may soon find themselves besieged like hundreds of thousands of others in the country. In response, 50,000 civilians have fled Aleppo for the Turkish border, where the border crossing is currently closed. An unnamed U.S. defense official toldThe Daily Beast’s Nancy Youssef that “the war is essentially over” if Assad manages to seize and hold Aleppo.
After the New Hampshire landslide, the Democrats will debate for the first time on equal footing.
Who’s the Democratic front-runner now?
When Hillary Clinton and Bernie Sanders meet in Milwaukee tonight, you might think it’s Sanders. The sixth Democratic debate comes just three days after the Vermont senator’s landslide win in the New Hampshire primary, and the only question seems to be just how aggressive Clinton will be in going after him.
The former secretary of state was clearly humbled, if not outright humiliated, in the state that had once given both her and her husband new life in past presidential campaigns. Sanders had been expected to win handily, but his 22-point margin was even larger than forecast and cut across almost all demographics: Not only did he dominate among his core group of younger voters, but he even won among women overall, according to exit polls.