Garbanzo Toons

Krugman's Alternative Universe

I've got some very liberal friends. Paul Krugman is their economist of choice. He is the darling of the left, especially when he skewers some conservative pundit. I've read some of his columns and seen a bit of his - um - skewering on Youtube, and I have to say that I think he's put his politics ahead of his thinking. Yes, I know he's a Nobel laureate and all, but I think he needs to reexamine some of his economic beliefs. Well actually, according to this piece by James Taranto at the Wall Street Journal, linked by way of House of Eratosthenes, maybe he unknowingly has. Either that, or he assumes that his uncritical, adoring fans will blindly accept anything he says as received wisdom, so it really doesn't matter what he says or if it has any basis in reality. Reading some of his NY Time columns and watching pieces of his TV appearances, he's probably right - about his sycophants, that is, but dead wrong about a lot of things that matter.

Former Enron adviser Paul Krugman takes note in his New York Times column of what he calls "the incredible gap that has opened up between the parties":

Today, Democrats and Republicans live in different universes, both intellectually and morally.

"What Democrats believe," he says "is what textbook economics says":

But that's not how Republicans see it. Here's what Senator Jon Kyl of Arizona, the second-ranking Republican in the Senate, had to say when defending Mr. Bunning's position (although not joining his blockade): unemployment relief "doesn't create new jobs. In fact, if anything, continuing to pay people unemployment compensation is a disincentive for them to seek new work."

Krugman scoffs: "To me, that's a bizarre point of view--but then, I don't live in Mr. Kyl's universe."

What does textbook economics have to say about this question? Here is a passage from a textbook called "Macroeconomics":

Public policy designed to help workers who lose their jobs can lead to structural unemployment as an unintended side effect. . . . In other countries, particularly in Europe, benefits are more generous and last longer. The drawback to this generosity is that it reduces a worker's incentive to quickly find a new job. Generous unemployment benefits in some European countries are widely believed to be one of the main causes of "Eurosclerosis," the persistent high unemployment that affects a number of European countries.

So it turns out that what Krugman calls Sen. Kyl's "bizarre point of view" is, in fact, textbook economics. The authors of that textbook are Paul Krugman and Robin Wells. Miss Wells is also known as Mrs. Paul Krugman.

It seems Krugman himself lives in two different universes--the universe of the academic economist and the universe of the bitter partisan columnist. Or maybe this is like that episode of "Star Trek" in which crewmen from the Enterprise switched places with their counterparts from a universe in which everyone was the same, only evil.

Like Spock, the evil Krugman is the one with the beard.

Kind of funny, ain't it? What is also humorous is that this bit of inconsistency will be ignored by the NY Times and all of Krugman's followers.

Labels: economics, New York Times, Nobel Prize, Paul Krugman

posted by Harry @ 5:36 PM