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.
Why some Americans are withdrawing from mainstream society into “intentional communities”—and what the rest of the country can learn from them
VIRGINIA— For the last eight years, Nicolas and Rachel Sarah have been slowly weaning themselves off fossil fuels. They don’t own a refrigerator or a car; their year-old baby and four-year-old toddler play by candlelight rather than electricity at night. They identify as Christian anarchists, and have given an official name to their search for an alternative to consumption-heavy American life: the Downstream Project, with the motto to “do unto those downstream as you would have those upstream do unto you.”
As it turns out, exiting the system is a challenging, time-consuming, and surprisingly technical process. Here in the Shenandoahs and central Virginia, a handful of tiny communities are experimenting with what it means to reject the norms of contemporary life and exist in a radically different way. They seem to share Americans’ pervasive sense of political alienation, which arguably reached an apotheosis with the election of Donald Trump: a sense of division from their peers, a distrust of government. The challenges of modern politics—dealing with issues like climate change, poverty, mass migration, and war on a global scale—are so vast and abstract that it’s difficult not to find them overwhelming. But instead of continuing in passive despair, as many Americans seem to do, the people in these communities decided to overhaul their lives.
Narcissism, disagreeableness, grandiosity—a psychologist investigates how Trump’s extraordinary personality might shape his possible presidency.
In 2006, Donald Trump made plans to purchase the Menie Estate, near Aberdeen, Scotland, aiming to convert the dunes and grassland into a luxury golf resort. He and the estate’s owner, Tom Griffin, sat down to discuss the transaction at the Cock & Bull restaurant. Griffin recalls that Trump was a hard-nosed negotiator, reluctant to give in on even the tiniest details. But, as Michael D’Antonio writes in his recent biography of Trump, Never Enough, Griffin’s most vivid recollection of the evening pertains to the theatrics. It was as if the golden-haired guest sitting across the table were an actor playing a part on the London stage.
“It was Donald Trump playing Donald Trump,” Griffin observed. There was something unreal about it.
When it comes to basic policy questions such as the minimum wage, introductory economics can be more misleading than it is helpful.
In a rich, post-industrial society, where most people walk around with supercomputers in their pockets and a person can have virtually anything delivered to his or her doorstep overnight, it seems wrong that people who work should have to live in poverty. Yet in America, there are more than ten million members of the working poor: people in the workforce whose household income is below the poverty line. Looking around, it isn’t hard to understand why. The two most common occupations in the United States are retail salesperson and cashier. Eight million people have one of those two jobs, which typically pay about $9–$10 per hour. It’s hard to make ends meet on such meager wages. A few years ago, McDonald’s was embarrassed by the revelation that its internal help line was recommending that even a full-time restaurant employee apply for various forms of public assistance.
A history of the first African American White House—and of what came next
In the waning days of President Barack Obama’s administration, he and his wife, Michelle, hosted a farewell party, the full import of which no one could then grasp. It was late October, Friday the 21st, and the president had spent many of the previous weeks, as he would spend the two subsequent weeks, campaigning for the Democratic presidential nominee, Hillary Clinton. Things were looking up. Polls in the crucial states of Virginia and Pennsylvania showed Clinton with solid advantages. The formidable GOP strongholds of Georgia and Texas were said to be under threat. The moment seemed to buoy Obama. He had been light on his feet in these last few weeks, cracking jokes at the expense of Republican opponents and laughing off hecklers. At a rally in Orlando on October 28, he greeted a student who would be introducing him by dancing toward her and then noting that the song playing over the loudspeakers—the Gap Band’s “Outstanding”—was older than she was.
In January 1999, Prosecutor General Yury Skuratov was summoned to the Kremlin by then-President Boris Yeltsin’s chief of staff, who showed him a videotape of “a man who looked like” Skuratov frolicking in bed with two prostitutes. Then he asked Skuratov to resign, even though the prosecutor was in the middle of investigating Yeltsin’s administration for taking bribes from a Swiss firm trying to secure lucrative contracts for Kremlin renovations. It was a grainy tape and Skuratov would later say it was fake, but he submitted his resignation nonetheless.
What happened next was one of the most decisive battles in determining who would replace Yeltsin when his second presidential term expired in 2000. Skuratov’s resignation had to be confirmed by the Federation Council, the upper chamber of the Russian parliament—back when it had not yet become a Kremlin rubber stamp. The Federation Council balked and asked Skuratov to testify, but the day before he appeared on the floor, RTR TV ran the tape on its evening news, calling the segment “Three in a Bed.” When the Federation Council continued to resist the Kremlin, and Skuratov tried to go back to work as if nothing happened, the tape was played on TV again, this time on the program of the notorious media hit man Sergei Dorenko. Allowing children to see the tape, Dorenko said, would make it harder for parents to raise them patriotically; this was, after all, the prosecutor general of the Russian Federation, “not Mick Jagger, who can run around the beach with a naked behind.”
Fifty years ago today, Martin Luther King wrote this landmark missive. It was republished several months later in The Atlantic.
While confined here in the Birmingham city jail, I came across your recent statement calling our present activities "unwise and untimely." Seldom, if ever, do I pause to answer criticism of my work and ideas. If I sought to answer all of the criticisms that cross my desk, my secretaries would be engaged in little else in the course of the day, and I would have no time for constructive work. But since I feel that you are men of genuine good will and your criticisms are sincerely set forth, I would like to answer your statement in what I hope will be patient and reasonable terms.
Is there room in the movement for people who morally object to abortion?
Pro-life women are headed to D.C. Yes, they’ll turn out for the annual March for Life, which is coming up on January 27. But one week earlier, as many as a few hundred pro-lifers are planning to attend the Women’s March on Washington, which has been billed as feminist counterprogramming to the inauguration.
With organizations like Planned Parenthood and NARAL Pro-Choice America co-sponsoring the event, pro-life marchers have found themselves in a somewhat awkward position. What’s their place at an event that claims to speak for all women, but has aligned itself with pro-choice groups? With roughly a week to go before the march, organizers also released a set of “unity principles,” and one of them is “open access to safe, legal, affordable abortion and birth control for all people.”
Indiana Democrats weigh in on their experience with the former governor.
Though he has not yet been installed in the Oval Office, Donald Trump has already made life fairly complex for his Republican brethren in Congress. Most recently, in an interview with the New York Times this week, Trump singlehandedly threw the GOP’s Obamacare repeal process into chaos, insisting that a repeal vote would come “probably some time next week” and a replacement “very quickly or simultaneously, very shortly thereafter.” Neither was correct, but especially the replacement timeline: Congressional Republicans are quietly insisting that it will be weeks before a replacement bill is ready—maybe even months (or years!).
The only person in the administration who seemed willing to acknowledge this reality is Vice President-elect Mike Pence. In a press conference earlier this month, following a meeting with Republican lawmakers, Pence said: “The architecture of the replacement of Obamacare will come together, as it should, through the legislative process in the weeks and months ahead.”
A massive eradication effort wiped out screwworms in the U.S. 35 years ago—but then they reappeared.
The stray dog came with bad news. This week, the U.S. Department of Agriculture announced that a dog near Homestead, Florida—a city 15 miles north of the Florida Keys—was found with wounds infested with screwworms, the much dreaded flesh-eating pest.
If you’re not familiar with screwworm, it’s because the U.S. poured millions of dollars into eradicating them back in 1982. But last fall, it reemerged in the Florida Keys, catching almost everyone by surprise. Wildlife biologists eventually found several deer on the archipelago with the parasite. Screwworms lay eggs in open wounds, burrowing into the flesh of pets and occasionally even humans. Livestock, historically, was the big economic concern. Florida still sends hundreds thousands of young calves to herds around the country each year, so a screwworm infestation could do some real damage.
The shocking lesson of The Prince isn’t that politics demands dirty hands, but that politicians shouldn’t care.
You remember the photograph: President Obama hunched in a corner of the Situation Room with his national-security staff, including Hillary Clinton with a hand over her mouth, watching the live feed from the compound in Pakistan where the killing of Osama bin Laden is under way. This is a Machiavellian moment: a political leader taking the ultimate risks that go with the exercise of power, now awaiting the judgment of fate. He knows that if the mission fails, his presidency is over, while if it succeeds, no one should ever again question his willingness to risk all.
It’s a Machiavellian moment in a second sense: an instance when public necessity requires actions that private ethics and religious values might condemn as unjust and immoral. We call these moments Machiavellian because it was Niccolò Machiavelli’s The Prince, written in 1513, that first laid bare the moral world of politics and the gulf between private conscience and the demands of public action.