
Paul Krugman Goes for a Knockout Against Scrappy Austerians - petethomas
http://www.bloomberg.com/graphics/2015-krugman-battles-austerians/?cmpid=yhoo
======
comex
The GIFs are clearly the product of some effort, but I would've preferred if
the article itself were a bit more thorough. In particular, it mentions
several debates between Krugman and other economists that seem to have a basis
in more or less factual allegations - whether switching to a different month
as a basis for a comparison would indeed seriously undermine one of his
arguments, whether he failed to predict such-and-such (really, in general
whether he's been as spot-on over the years as he himself claims), etc. What
I'd really like to read would be a Politifact-style third party analysis of
the disputes. Of course, there is no such thing as a truly objective fact
check, but an attempt would at least give me some idea of the reality of the
situation. I could try to do the research myself, but I don't know the first
thing about economics, so I expect it would be rather difficult... doesn't
prevent me from taking a casual interest in the matter.

~~~
maxlybbert
There are no GIFs, but I enjoyed the "Three Wrongs Don't Make a Right" article
( [http://fee.org/freeman/detail/paul-krugman-three-wrongs-
dont...](http://fee.org/freeman/detail/paul-krugman-three-wrongs-dont-make-a-
right) ):

"Krugman, armed with his Keynesian model, came into the Great Recession
thinking that (a) nominal interest rates can’t go below 0 percent, (b) total
government spending reductions in the United States amid a weak recovery would
lead to a double dip, and (c) persistently high unemployment would go hand in
hand with accelerating price deflation. Because of these macroeconomic views,
Krugman recommended aggressive federal deficit spending.

"As things turned out, Krugman was wrong on each of the above points: we
learned (and this surprised me, too) that nominal rates could go persistently
negative, that the US budget 'austerity' from 2011 onward coincided with a
strengthening recovery, and that consumer prices rose modestly even as
unemployment remained high. Krugman was wrong on all of these points, and yet
his policy recommendations didn’t budge an iota over the years.

"Far from changing his policy conclusions in light of his model’s botched
predictions, Krugman kept running victory laps, claiming his model had been
'right about everything.' He further speculated that the only explanation for
his opponents’ unwillingness to concede defeat was that they were evil or
stupid."

~~~
comex
I read the article. It's interesting, as it does point out situations where
Krugman seems to have been somewhat wrong in hindsight - which may be more
discrediting than it otherwise would be, despite the difficulty of most
predictions, when combined with his constant self-praise. That said, the
evidence is fairly subjective: for example, even as someone unfamiliar with
economics I can be pretty confident that Murphy is overstating his case when
he lambastes Krugman for talking about the zero lower bound, when it turns out
that interest rates can go _slightly_ negative - it may be more than
"nitpicking", as he says, but the zero lower bound turning out to be less than
zero hardly vindicates the idea that the entire concept is a "mentality"
Krugman is "locked into". Also, a prediction that 'X will push the economy in
the wrong direction' is not directly contradicted by the economy going in the
right direction in the presence of X; it's evidence against the relation, but
not necessarily strong evidence in a complex system with many other factors -
yet Murphy uses words like "revisionism" and "withering and irrefutable
criticism".

Meanwhile, Wikipedia has links to articles where Murphy _has_ made absolutely
worded claims that have turned out to be _completely_ wrong. That doesn't make
Krugman right, but it's hard to take seriously anything about economics
written by someone who said

"We can’t know the timing of the impending monetary catastrophe, but it is
coming. Smart investors will minimize their dependence on the dollar before it
crashes. At this late date, no one should trust the government and media
“experts” who assure us that the worst is over." [1]

Maybe two excesses average out somewhere closer to the truth? But I'd like a
more neutral source.

[http://www.theamericanconservative.com/articles/killing-
the-...](http://www.theamericanconservative.com/articles/killing-the-
currency/)

~~~
maxlybbert
The argument isn't simply that Krugman is a human -- although that might be
news to him -- but that, contrary to his claims, he hasn't been "right on
everything" and has, in fact, been fundamentally wrong on the main thing he's
been talking about for a decade.

> the zero lower bound turning out to be less than zero hardly vindicates the
> idea that the entire concept is a "mentality" Krugman is "locked into".

Krugman's been arguing that at the zero lower bound the regular laws of
economics don't apply. That's not a caricature ("When depression economics
prevails, the usual rules of economic policy no longer apply: virtue becomes
vice, caution is risky and prudence is folly",
[http://www.nytimes.com/2008/11/14/opinion/14krugman.html](http://www.nytimes.com/2008/11/14/opinion/14krugman.html)
). Krugman's tried to establish himself as somebody able to reason in this
weird realm (although his recommendations always amount to "spend more and
don't worry about the deficit"), so it seems important to know where the weird
realm actually is. It's certainly true that the US didn't have any experience
with the zero lower bound, but it's also true that there are a few other free
market economies in the world that might have given a deep thinker something
to work off of.

> Also, a prediction that 'X will push the economy in the wrong direction' is
> not directly contradicted by the economy going in the right direction in the
> presence of X; it's evidence against the relation, but not necessarily
> strong evidence in a complex system with many other factors

But Krugman didn't say that austerity would simply cause headwinds, or just
push the economy in the wrong direction. According to the Bloomberg article,
he said people advocating austerity enjoyed inflicting economic suffering, and
he coined the words "austerian" and "sadomonetarist." He routinely said that
austerity would cause a new recession before we recovered from the first. Not
that it would be hard to overcome austerity, but that it would be impossible
to. Then, when the predicted double dip never occurred, he declared victory
and claimed he'd been right about everything.

The only substance I can see from the original Bloomberg article is that
Krugman enjoys a scrappy technique when debating other economists. But his
record doesn't really justify his statements that people only disagree with
him because they are evil or insane.

------
EdSharkey
The whole anti-austerity argument has always sounded to me like the left's
version of "grow your way out of recession/depression" or "trickle down
economics".

Doesn't wasteful central government stimulus always just enrich cronies and
banksters? The whole shovel-ready jobs being nowhere to be found/summer of
recovery thing was kindof laughed off by the president, but that obscene
$500bil stimulus still got spent.

~~~
jbooth
Sure, 'wasteful' anything is probably, uh, wasteful. But there's a long
history of successfully executed stimulus, VERY MUCH INCLUDING the recent one
which was supposed to lead to hyperinflation and the end of society as we know
it, but actually was highly correlated with a very nice recovery from near
total economic meltdown.

Austerity has way better rhetoric, you can talk about wasteful spending and
living within our means, blah blah, but the predictions have absolutely sucked
compared to standard economics.

Edit: other austerity greatest hits:

* don't bail out detroit!

* qe will lead to hyperinflation!

* cancel infrastructure projects!

* buy gold!

~~~
EdSharkey
I suppose 'wasteful' isn't descriptive enough. What I was thinking was
something like, 'a big glob of money generally earmarked for boosting the
economy and other do-goodery'.

Sure 500bln is a delicious shot in the arm, even if most of it is 'wasted' on
the cronies. I can't predict what will trigger inflation, hyper- or otherwise,
in this distorted economy. All I want to know is, just when exactly can I
expect the payoff? Will there be growth or recovery such that the debt holders
are paid back? No? Never can expect it, realistically? Ok, let's cut it out
with the stimulus then, because I'm sick of bailouts and blatant cronyism.

~~~
jbooth
You already got the payoff, look at some charts of gdp and employment figures
from 2008-2012. The downward slide was stopped and the slow recovery started,
exactly the opposite of what the naysayers predicted.

In other words there was a huge change in the derivative of those rates,
downward change flattened and bent upwards.

------
Mikeb85
The fact that anyone will still argue for austerity is mind-boggling.

It's been shown to have failed. You can't slash spending and increase taxes
and expect the GDP to go anywhere but down. Greece is the poster child.

Most of the arguments made for austerity is for countries that modestly
reduced some government spending in an otherwise positive economic state.

And let's face it, every 'developed' country's government spends a vast
quantity of money, far more than most will admit. Here's a list of countries'
government spending as a percentage of GDP:
[https://en.wikipedia.org/wiki/Government_spending#As_a_perce...](https://en.wikipedia.org/wiki/Government_spending#As_a_percentage_of_GDP)

The US is at 42%, Germany at 45%, Sweden at 51%, and France at 56%, and
Denmark at 57%. Most of the countries at the lower percentages are '3rd world'
or failed states... The idea that a 'smaller' government will lead to economic
prosperity has no basis in historical reality.

~~~
overgard
I have no strong opinions on austerity (I think this tends to be a european
topic that I hesitate to comment on because I don't have enough information),
but I don't think it's that weird that people might disagree. Somehow
Keynesian economics has become the dominant ideology, and while I think that
rational people can certainly have differences with regard to his economic
views, I think it's weird that his ideas have essentially become a religion,
where arguing against them relegates one to the "fringe".

Of course, this article didn't help, because instead of advancing a thoughtful
discussion, it tried to use animated gifs and "clever" web design to distract
people from noticing that the content of the article was both vapid and
internally incoherent.

I know people are probably thinking, "why do you care", and I don't
particularly, but I think this article is basically an insult to all of us.
This is bloomberg essentially stating: "this is what we think of you, if
you're reading this, we think you're the sort of person that can be distracted
by shiny stupidity". My previous feelings towards bloomberg were mildly
positive, but I suspect moving forward any articles they write I will have a
more critical view towards.

That said, hats off to the people that made the images. They are really good,
and obviously the people behind them are very talented. I wish it had been
attached to something worthwhile.

~~~
Mikeb85
> I think it's weird that his ideas have essentially become a religion

If you think that's strange, read internet blogs based around the 'Austrian'
economic school.

Anyhow, Keynes' theories weren't so much ideological as they were based on his
observations of economic events and models. And they've been elaborated on in
the current 'dominant' economic school, which is better called 'Neoclassical
Economics', wrongly labelled as 'Keynesian Economics' by the naysayers (though
of course much of it does develop on Keynes' ideas).

> while I think that rational people can certainly have differences with
> regard to his economic views

The problem isn't so much people with 'different' opinions, but rather those
who have opinions about economics but no coherent economic models, theories or
observations of their own.

And I've found many of those who argue against Keynes' theories are also the
ones who espouse things like a gold-backed currency, or eliminating government
altogether. I've seen blogs that equate Keynesian economics to satanism...
There's far more 'kooks' in the anti-Keynesian camp than in the Neoclassical
camp.

~~~
overgard
> If you think that's strange, read internet blogs based around the 'Austrian'
> economic school.

Well, I have. And I found myself mostly agreeing with them. That's neither
here nor there, I wouldn't think someone was dumb if they didn't share my
viewpoint.

> And I've found many of those who argue against Keynes' theories are also the
> ones who espouse things like a gold-backed currency, or eliminating
> government altogether. I've seen blogs that equate Keynesian economics to
> satanism...

That's not really fair though, you can find kooks in ANY subject matter. It
proves nothing other than that, kooks exist. Also I don't think people that
argue for a gold standard are insane. I personally disagree with them, but
they do have some valid points. I actually think it's kind of weird that the
modern, relatively young system of governments printing debt with no tethoring
to actual economic goods or work is somehow considered "obviously" right.
We're barely a hundred years into this experiment and a lot of really bad
thing have happened already, it could be entirely wrong.

~~~
Mikeb85
> Well, I have. And I found myself mostly agreeing with them.

And that's not surprising, because most 'Austrian' economic tenets are a part
of micro-economics. Opportunity cost, marginalism, consumer preference, and
other concepts that form part of neoclassical economics originally come from
the 'Austrian' school. No one disputes that, and these all are taught in
economics courses.

The problem with modern 'Austrian' economists is that they generally don't
have a coherent macro-economic model, with the more modern 'Austrian'
economists (do any real ones exist?) veering into ideology, philosophy and
politics. Most reject the advances made into econometrics, mathematic models,
and modern neoclassical macro theory.

And that's not to say there's no disagreement in the neoclassical camp. But
pretty much everyone who actually attempts to practice economics as a science,
generally falls into the neoclassical camp.

Edit - there's a reason Hayek is more frequently cited by right-wingers and
libertarians than by economists. Most of his writings were political, and many
of his predictions false.

~~~
overgard
Yeah I think that's mostly true. I find myself agreeing with the austrian's
diagnosis of present economics, but the medicine they suggest does not always
seem appealing or correct, and I think worshipping hayek is basically as dumb
as worshipping keynes. Don't get me wrong, big ideas worth reading about,
important people, but I strongly suspect they were both significantly wrong
about some big things.

Still though, when I hear commentary by someone like Peter Schiff, I find it
very hard to ignore. Perhaps his ideas are "out there", but so were the people
that suggested that the sun does not revolve around the earth. I guess that's
a long winded way of saying I don't think they're obviously batshit insane
wackos, they have ideas that should be heard.

------
stephenboyd
You know you're finally an adult when mainstream business news companies try
to package themselves in a way that appeals to people your age. Are 16 bit-
style animated loops like the "Dennis Hopper in a motorcycle jacket" for
millenials? Are we going to see mutual fund ads like this in 20 years?

------
c2the3rd
One thing to remember about Krugman is that his specialty in college was trade
theory. That is what he studied as a graduate and what his thesis was about.
He made landmark advances in that field, and I respect him for it. However,
this also means he is not an authority on monetary or fiscal policy and his
views on these things do not have the weight some think they do. He is widely
published in mainstream news only because he is an talented writer.

~~~
ende
Yup. If anyone wants to read some high quality Krugman, check out his recent
posts on TPP. I think he does a great disservice to his intellect by wading
into political economy and his constant partisan mudslinging. I think it's the
one thing standing in the way of him taking the baton from Milton Friedman.

------
afsina
I read it as ".. Against Scrappy Austrians" and thought finally Krugman showed
some guts to debate against Austrian school economists.

------
noobermin
Sheesh, am I the only one who actually enjoyed the visuals? The idea of having
economists in an arcade brawl is basically parodying their usual blogpost
battles and treating it as if it were real fighting, so I found it humorous.

The article itself, however, is queer--it ends in an unsatisfying ambiguity:
apparently Krugman wins because he is both "ref as well as combatant". In
fact, the article seems to imply he loses three arguments (there are three
gifs of him getting hit) and wins two, although with Osbourne, it's a little
ambiguous there who is right. So, 1.5/5...So he...wins?

~~~
overgard
> Sheesh, am I the only one who actually enjoyed the visuals?

Pretty much. The pixel art was well made, but the point of design is to convey
an idea. The only point conveyed to me here was "I can't read this because
things are flickering in the corner of my eye", and the parts I did manage to
read did not seem worthwhile of the effort.

------
atmosx
I was disappointed, although I've read many of those debates (to some I could
answer easily myself heh) but this nice street-fighter-like gifs and the short
text without any sort of arguments/data is kinda ridiculous.

------
datainplace
I hate that Bloomberg is trying to be Buzzfeed. This could be the most amazing
though provoking article of all time, but I'm not going to read it when it
starts with an animated Krugman GIF

~~~
overgard
Yeah, it's entirely unreadable, but I suspect for the target audience reading
is not the point.

------
sixQuarks
When you throw as much money at the problem as we did in 2008-09, of course
there's going to be a "recovery". I'll believe Krugman was right only if we go
another 15 years without a major economic collapse.

I believe all we did following his policies is kick the can down the road, and
will eventually pay a bigger price in the future.

------
bjterry
This is interesting as an art piece, but I think it is easy to intuit from the
presentation that the authors are not being very careful thinkers.

The truth is that the question of austerity is a fairly complex one. The
reason it seems so cut and dried is that the modal promoter of austerity has
no training in macroeconomics and is making arguments that are clearly not
supported by theory. That said, to portray Krugman as definitely correct on
the matter of austerity is very misleading.

There are basically two camps of people opposing Krugman, "mainstream
Austrians" and market monetarists. Mainstream Austrians isn't really a
category, but this is people who make arguments based on analogies with
household budgets, and worry about hyperinflation from out of control
spending. Most of them have economic theories that are not well-supported
empirically. These people say austerity is better and will lead to stronger
growth, possibly after a painful period of economic adjustment. Often these
are head economists at small banks or other pundits that get a lot of airtime
for their opinions. They probably don't actually identify as Austrians 95% of
the time, but in this particular instance they are following Austrian
thinking.

The other major camp is market monetarists, whom Krugman is very dismissive
of, despite the fact that their arguments are compelling and their empirical
support is probably as strong as pro-spending Keynesians. In his arguments
with market monetarists Krugman has been almost dishonestly evasive, initially
claiming that the American austerity would be the ultimate test of market
monetarist thinking, but then posting no follow-up eating crow after the test
showed strong macroeconomic growth "in spite of" the austerity.

The fundamental issue of austerity under market monetarist thinking is that of
monetary offset. The central bank has an inflation target, and they are
targeting it no matter the fiscal policy of the country as enacted by
legislators. If the legislature authorizes dramatically higher spending,
monetary authorities increase interest rates to slow down the economy and
bring inflation back in line with their 2% target. If the legislature instead
goes after austerity policies, the monetary authorities lower interest rates
to increase economic activity and again hit that 2% inflation target. In
America, when our austerity came into effect, our central bank started a round
of additional quantitative easing, which is functionally similar to lowering
the interest rate when it is at zero, and this lead to us having continued
growth despite the slowdown in government spending.

One of the things about monetary offset is that it only applies to countries
that have independent monetary policy, i.e. they have their own independent
central bank issuing their own currency. Market monetarists and Keynesians
agree that austerity is a terrible policy for countries in the Eurozone,
because they do not have independent monetary policy to make up for their
decreased spending. The problem is that Keynesians also apply that thinking to
countries that have independent monetary policy like the UK, Switzerland and
the US. The fact that Krugman does not address this explicitly is one of the
best demonstrations of his unwillingness to intellectually engage with his
market monetarist opponents. It's much easier to bash on the people making the
worst arguments on the other side, rather than those making the best
arguments, and he is obviously very political in his thinking, and thus very
tribal in his politics. Krugman is a very careful writer, however, so he
rarely says anything that's outright wrong, he just chooses not to address the
best arguments against his viewpoints, or says more by implication than by
direct statement.

For more on market monetarism, one can read the blog of Scott Sumner at
[http://www.themoneyillusion.com/](http://www.themoneyillusion.com/) or as one
of the blggers at [http://econlog.econlib.org](http://econlog.econlib.org) and
in particular one can read recent posts at [1], [2] and [3] on this topic:

1:
[http://econlog.econlib.org/archives/2015/06/the_other_thing....](http://econlog.econlib.org/archives/2015/06/the_other_thing.html)

2:
[http://econlog.econlib.org/archives/2015/06/russ_roberts_vs_...](http://econlog.econlib.org/archives/2015/06/russ_roberts_vs_1.html)

3:
[http://www.themoneyillusion.com/?p=29692](http://www.themoneyillusion.com/?p=29692)

------
overgard
This is quite possibly one of the stupidest things I've ever seen. First off,
the form. I did not appreciate the fact that hitting the down arrow on the
keyboard made me scroll right, and the right arrow did nothing. I'm amazed by
people that go to great technical lengths to fuck up scrolling. My browser
works fine by default, stop doing shit to break it.

Second, I can't even find the point of this article other than like, Paul
Krugman wins at something and they have illustrated this by showing him
punching people? Is that really the standard now? Jesus Christ. Even before
this I thought Paul Krugman was generally an idiot, and while I don't know if
he endorsed this nonsense, it doesn't help my opinion of him.

Third, the animated gifs made this unfucking readable. Even if I wanted to
focus on the light weight content, I couldn't, because there's this goddamn
gif blinking in the corner of my eye every three seconds. If you're making me
queue up an ad blocker to block a thing that's not even an ad, you've failed
at web design.

~~~
dredmorbius
Applause, on all points.

I've got the article open in w3m to see it's even worth reading.

