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.
The Islamic State is no mere collection of psychopaths. It is a religious group with carefully considered beliefs, among them that it is a key agent of the coming apocalypse. Here’s what that means for its strategy—and for how to stop it.
What is the Islamic State?
Where did it come from, and what are its intentions? The simplicity of these questions can be deceiving, and few Western leaders seem to know the answers. In December, The New York Times published confidential comments by Major General Michael K. Nagata, the Special Operations commander for the United States in the Middle East, admitting that he had hardly begun figuring out the Islamic State’s appeal. “We have not defeated the idea,” he said. “We do not even understand the idea.” In the past year, President Obama has referred to the Islamic State, variously, as “not Islamic” and as al-Qaeda’s “jayvee team,” statements that reflected confusion about the group, and may have contributed to significant strategic errors.
Defining common cultural literacy for an increasingly diverse nation.
Is the culture war over?
That seems an absurd question. This is an age when Confederate monuments still stand; when white-privilege denialism is surging on social media; when legislators and educators in Arizona and Texas propose banning ethnic studies in public schools and assign textbooks euphemizing the slave trade; when fear of Hispanic and Asian immigrants remains strong enough to prevent immigration reform in Congress; when the simple assertion that #BlackLivesMatter cannot be accepted by all but is instead contested petulantly by many non-blacks as divisive, even discriminatory.
And that’s looking only at race. Add gender, guns, gays, and God to the mix and the culture war seems to be raging along quite nicely.
People labeled “smart” at a young age don’t deal well with being wrong. Life grows stagnant.
At whatever agesmart people develop the idea that they are smart, they also tend to develop vulnerability around relinquishing that label. So the difference between telling a kid “You did a great job” and “You are smart” isn’t subtle. That is, at least, according to one growing movement in education and parenting that advocates for retirement of “the S word.”
The idea is that when we praise kids for being smart, those kids think: Oh good, I'm smart. And then later, when those kids mess up, which they will, they think: Oh no, I'm not smart after all. People will think I’m not smart after all. And that’s the worst. That’s a risk to avoid, they learn.“Smart” kids stand to become especially averse to making mistakes, which are critical to learning and succeeding.
For centuries, experts have predicted that machines would make workers obsolete. That moment may finally be arriving. Could that be a good thing?
1. Youngstown, U.S.A.
The end of work is still just a futuristic concept for most of the United States, but it is something like a moment in history for Youngstown, Ohio, one its residents can cite with precision: September 19, 1977.
For much of the 20th century, Youngstown’s steel mills delivered such great prosperity that the city was a model of the American dream, boasting a median income and a homeownership rate that were among the nation’s highest. But as manufacturing shifted abroad after World War II, Youngstown steel suffered, and on that gray September afternoon in 1977, Youngstown Sheet and Tube announced the shuttering of its Campbell Works mill. Within five years, the city lost 50,000 jobs and $1.3 billion in manufacturing wages. The effect was so severe that a term was coined to describe the fallout: regional depression.
The retired general and former CIA director holds forth on the Middle East.
ASPEN, Colo.—Retired U.S. Army General David Petraeus pioneered America’s approach to counterinsurgency, led the surge in Iraq, served as director of the CIA for a year, and was sentenced to two years probation for leaking classified information to his mistress. On Wednesday at the Aspen Ideas Festival, he was interviewed by my colleague, Jeffrey Goldberg, about subjects including efforts to stop Iran’s nuclear program; the civil war in Syria; ISIS and the threat it poses to the United States; and the Iraq War.
Here are several noteworthy moments from their conversation, slightly condensed:
The Risks of Attacking Iran
Jeffrey Goldberg: So you believe that, under certain circumstances, President Obama would still use military force against Iran?
David Petraeus: I think he would, actually. I know we’ve had red lines that didn’t turn out to be red lines. ... I think this is a different issue, and I clearly recognize how the administration has sought to show that this is very, very different from other sort of off-the-cuff remarks.
Goldberg: How did the Obama administration stop Israel from attacking Iran? And do you think that if this deal does go south, that Israel would be back in the picture?
Petraeus: I don’t, actually. I think Israel is very cognizant of its limitations. ... The Israelis do not have anything that can crack this deeply buried enrichment site ... and if you cannot do that, you’re not going to set the program back very much. So is it truly worth it, then?
So that’s a huge limitation. It’s also publicly known that we have a 30,000-pound projectile that no one else has, that no one else can even carry. The Massive Ordinance Penetrator was under design for almost six years. ... If necessary, we can take out all these facilities and set them back a few years, depending on your assumptions.
But that’s another roll of the iron dice, as Bismarck used to say, and you never know when those dice are rolled what the outcome is going to be. You don’t know what risks could materialize for those who are in harm’s way.
You don’t know what the response could be by Iran.
There’s always the chance that there will be salvos at Israel, but what if they decide to go at the Gulf states, where we have facilities in every single one.
This is not something to be taken lightly, clearly.
Be kind, show understanding, do good—but, some scientists say, don’t try to feel others’ pain.
In 2006, then-senator Barack Obama gave a commencement speech offering what seemed like very sensible advice. “There’s a lot of talk in this country about the federal deficit,” he told Northwestern’s graduating class. “But I think we should talk more about our empathy deficit—the ability to put ourselves in someone else’s shoes; to see the world through those who are different from us—the child who’s hungry, the laid-off steelworker, the immigrant woman cleaning your dorm room.”
In the years since then, the country has followed Obama’s counsel, at least when it comes to talking about empathy. It’s become a buzzword, extolled by Arianna Huffington, taught to doctors and cops, and used as a test for politicians. "We are on the cusp of an epic shift,” according to Jeremy Rifkin’s 2010 book The Empathetic Civilization. “The Age of Reason is being eclipsed by the Age of Empathy."
“I’m not a vegetarian because I love animals. I’m a vegetarian because I hate plants.”
If the U.S. and Iran conclude a nuclear deal next week, the Islamic Republic stands to gain billions of dollars in eventual sanctions relief. But money isn’t the most important reason the Iranian leadership may be set to shake hands with its historic enemy after 18 months of negotiations.
“One of the most important reasons Iran is signing this deal, in my opinion ... is not actually sanctions,” said Vali Nasr, the dean of Johns Hopkins University’s School of Advanced International Studies. “It’s ISIS. There is actually support for this deal within the Revolutionary Guards in Iran, because their day job is right now fighting ISIS, and they need the United States, particularly in Iraq, on the right side of that fight.”
A European heat wave, lightning over California, a building made of 8,500 beer bottles, shrimp fishing on horseback in Belgium, the first-ever White House Campout, mine detection rats in Cambodia, and much more.
A European heat wave, lightning over California, a building made of 8,500 beer bottles, cosplay in Paris, shrimp fishing on horseback in Belgium, the first-ever White House Campout, mine detection rats in Cambodia, a train wreck in Pakistan, an airshow over St. Petersburg, Russia, and much more.
Former Senator Jim Webb is the fifth Democrat to enter the race—and by far the most conservative one.
In a different era’s Democratic Party, Jim Webb might be a serious contender for the presidential nomination. He’s a war hero and former Navy secretary, but he has been an outspoken opponent of recent military interventions. He’s a former senator from Virginia, a purple state. He has a strong populist streak, could appeal to working-class white voters, and might even have crossover appeal from his days as a member of the Reagan administration.
In today’s leftward drifting Democratic Party, however, it’s hard to see Webb—who declared his candidacy Thursday—getting very far. As surprising as Bernie Sanders’s rise in the polls has been, he looks more like the Democratic base than Webb does. The Virginian is progressive on a few major issues, including the military and campaign spending, but he’s far to the center or even right on others: He's against affirmative action, supports gun rights, and is a defender of coal. During the George W. Bush administration, Democrats loved to have him as a foil to the White House. It’s hard to imagine the national electorate will cotton to him in the same way. Webb’s statement essentially saying he had no problem with the Confederate battle flag flying in places like the grounds of the South Carolina capitol may have been the final straw. (At 69, he’s also older than Hillary Clinton, whose age has been a topic of debate, though still younger than Bernie Sanders or Joe Biden.)