Robert Skidelsky vs. Niall Ferguson: John Maynard Keynes Is Not Ke$ha (Also, the U.S. Is Not Greece, and 2013 Is Not 1923)
Noted for May 9, 2013

Has Clive Crook Recovered His Orientation? Perhaps...

My comment on: http://www.bloomberg.com/news/2013-05-09/krugman-delong-and-radical-centrism.html

Now that is infinitely better!

But do note you are no longer claiming that Paul Krugman trying to radicalize the Obama administration's position on "the stimulus" in the winter of 2008-2009. You are, instead, making a different argument: an argument that Krugman's position at the end of 2010, after the largely-Republican politicization of everything, was not centrist enough.

And do note that the rest of Krugman's column--the part you do not quote--undermines your new argument pretty completely.

What Krugman says is:

[W]hile raising taxes when unemployment is high is a bad thing, there are worse things…. [L]etting the Bush tax cuts expire on schedule, is the lesser of two evils…. America… cannot afford to make those cuts permanent. We’re talking about almost $4 trillion in lost revenue just over the next decade; over the next 75 years, the revenue loss would be more than three times the entire projected Social Security shortfall. So giving in to Republican demands would mean risking a major fiscal crisis — a crisis that could be resolved only by making savage cuts in federal spending… dismantl[ing] large parts of Social Security and Medicare.

So the potential cost of giving in to Republican demands is high. What about the costs of letting the tax cuts expire? To be sure, letting taxes rise in a depressed economy would do damage — but not as much as many people seem to think… the unemployment rate next year by between 0.1 and 0.3 percentage points compared with what it would be if the tax cuts were allowed to expire; the effect would be about twice as large in 2012. Those are significant numbers, but not huge — certainly not enough to justify the apocalyptic rhetoric….

Last but not least: if Democrats give in to the blackmailers now, they’ll just face more demands in the future. As long as Republicans believe that Mr. Obama will do anything to avoid short-term pain, they’ll have every incentive to keep taking hostages. If the president will endanger America’s fiscal future to avoid a tax increase, what will he give to avoid a government shutdown? So Mr. Obama should draw a line in the sand, right here, right now. If Republicans hold out, and taxes go up, he should tell the nation the truth, and denounce the blackmail attempt for what it is.

To claim that this shows that Krugman "cared as much about undoing the Bush tax cuts as about expanding and extending the fiscal stimulus" is, I think, simply wrong. Krugman says that losing stimulus by raising is a bad, but in this case it is a small short-term public-policy bad, and extending the tax cuts is a bad, and in this case is a large long-run public-policy bad, so the balance right now is for standing firm.

Only if you do not read the second half of Krugman's column, or do not actually do the arithmetic, can you draw the conclusion that you do.

And I am still looking for reasonable Republicans that Krugman should engage with but has not. So far the RAs report that this year Krugman has engaged with--i.e., considered the arguments of rather than denouncing as "knaves, fools, or sociopaths"--the following right-of-center people: Alberto Alesina, Silvia Ardagna, Bruce Bartlett, David Beckworth, Ben Bernanke, Nick Eberstadt, Martin Feldstein, David Greenlaw, James Hamilton, Peter Hooper, Masaaki Kanno, Greg Mankiw, Allan Meltzer, Rick Mishkin, Tim Lee, Carmen Reinhart, Vince Reinhart, Ken Rogoff, Irwin Stelzer, Scott Sumner.

That seems to me to be pretty much the right list.

The RAs report that, by contrast, they have only been able to find you praising three Republicans: Paul Ryan--for which you should apologize to the world, for he is a con artist--Alan Simpson--a man who when he was in office could never find a Democratic budget-balancing proposal he could vote for or a Republican budget-busting proposal he could vote against, and so who is the canonical budget arsonist now wearing a fire chief's hat--and Bob Zoellick, who is a wonderful public servant, an excellent intellectual, a person who I would have no hesitation in putting in many cabinet-level seats in the American government, but who is not a first-rate policy intellectual.

If you can't provide examples of reasonable Republicans--and, unless I missed it, you still don't--shouldn't that tell you something about how your opinions-of-shape-of-earth-differ journalism is two decades past its sell-by date?


Crook's full column:

Krugman, DeLong and Radical Centrism: Brad DeLong has commented on my beef with Paul Krugman. I’m reluctant to engage, to be honest, because his post exemplifies the intemperance I’m addressing. Once an admirer, I gave up on his commentary a long time ago. You get a sense of the problem from his post about me. He illustrates it with a picture of a clown. He also wants me fired. “Bloomberg has some house-cleaning to do,” he says -- charming, and from a tenured academic, to boot.

DeLong’s fine under the supervision of a competent adult, as here (an excellent paper, which I praised at the time). But as an unattended blogger he regresses to intellectual adolescence, light on thinking and exhaustingly heavy on peevish belligerence. Not just uncivil, he actually disapproves of civility -- today, as you see, I’m trying to meet him halfway.

The substance of DeLong’s complaint about my column and post appears to be that they lack supporting documentation. I asserted (thinking it self-evident) that many Republicans are thoughtful and public-spirited. DeLong is incredulous and finds it revealing that I failed to give examples. I also accused Krugman of letting partisan politics taint his analysis and said he cared as much about undoing the Bush tax cuts as about expanding and extending the fiscal stimulus. At this, DeLong is aghast. He demands to see my evidence.

Will this do? From Krugman’s column, Let’s Not Make a Deal, in December 2010.

Back in 2001, former President George W. Bush pulled a fast one. He wanted to enact an irresponsible tax cut, largely for the benefit of the wealthiest Americans. But there were Senate rules in place designed to prevent that kind of irresponsibility. So Mr. Bush evaded the rules by making the tax cut temporary, with the whole thing scheduled to expire on the last day of 2010.

The plan, of course, was to come back later and make the thing permanent, never mind the impact on the deficit. But that never happened. And so here we are, with 2010 almost over and nothing resolved.

Democrats have tried to push a compromise: let tax cuts for the wealthy expire, but extend tax cuts for the middle class. Republicans, however, are having none of it. They have been filibustering Democratic attempts to separate tax cuts that mainly benefit a tiny group of wealthy Americans from those that mainly help the middle class. It’s all or nothing, they say: all the Bush tax cuts must be extended. What should Democrats do?

The answer is that they should just say no. If GOP intransigence means that taxes rise at the end of this month, so be it.

Krugman proposed raising taxes on all Americans while the recovery was still very weak. He recognized this as a fiscal tightening that would put people out of work. He advocated it because the alternative of retaining the Bush tax cuts would have handed the Republicans a victory, and because -- get this -- he was worried about the long-term deficit implications. There you have it: Krugman the apolitical Keynesian. Krugman has another post on all this too. He repeats that I falsely accused him of politicizing fiscal policy. I’ve nothing to add on this. But I’d like to comment on his accusation that I’m afflicted with “pathological centrism.”

I’ve been accused of worse things, so I probably shouldn’t complain. But there’s a distinction to be made between different kinds of centrism. Split-the-difference centrism is often necessary in a democracy, and not to be despised, but that isn’t how I think about issues. I’ve supported a bigger and longer lasting stimulus, a view usually associated with the left. I’ve supported Obamacare (flaws notwithstanding), a view usually associated with the left. I’m for higher taxes on investment income, a view usually associated with the left. I see public-sector unions as opposed to the public interest and would like to see their power curbed, a view usually associated with the right. I’m for partial privatization of social security, because I’d like to advance the ownership society, a view usually associated with the right. I think the federal government has taken on too much and that the balance of political power should be pushed back to the states, a view usually associated with the right. I could go on.

Neither party wants anything to do with me, obviously. Perhaps that makes me a centrist -- but not a split-the-difference centrist. I prefer to think of myself as a radical centrist. Big difference.


One more thing. While this is better, I would not yet call this good. Consider your:

Krugman proposed raising taxes on all Americans while the recovery was still very weak. He recognized this as a fiscal tightening that would put people out of work. He advocated it… because -- get this -- he was worried about the long-term deficit implications. There you have it: Krugman the apolitical Keynesian.

Your claim is that Krugman lied when he said he was worried about the long-term deficit implications--that he sacrificed his techocratic Keynesian beliefs in order to take a position that advanced a partisan political agenda.

That claim is false. That claim may get you a laugh at your lunches at the Heritage Foundation, but when I read this--or, indeed, when anybody reality-based reads this--my or their reaction is going to be simple: "Derp. Derp. Derp. Derp."

Now there are people for whom it would be out-of-bounds to worry about extending the Bush tax cuts. The Kansas City Keynesians--Abba Lerner and his latter-day followers, MMT, etc.--argue that either (a) the economy is depressed in which case the real interest rate is so low that the government's budget constraint does not bind, or (b) the economy is in a boom and thus that controlling inflation requires running a budget surplus that automatically pays down the debt. Thus, in their view, satisfying the government budget-balance condition is not an extra constraint imposed on policy but rather something that is automatically satisfied as a byproduct of proper aggregate demand management.

But Krugman is not a believer in MMT, not a follower of Abba Lerner, not a Kansas City Keynesian. Krugman is an MIT Keynesian. He is not Randy Wray or Bill Black or Stephanie Kelton. He is Paul Krugman.

And Paul Krugman does worry about the long-run financing of the federal government. Krugman does--as people who read him with any degree of attention know--firmly and explicitly believe that the current liquidity trap is only temporary, and that after we exit from the liquidity trap monetary policy will resume its primary place as stabilization-policy tool and the budget will have to be sustainable with taxes high enough to make the debt grow more slowly than GDP. Thus long-run policies--like the permanent extension of the Bush tax cuts--need to be such as to get a properly-funded and right-sized government.

Your claim that Krugman lies when he says he is worried about the long-run deficit implications of extending the 2001 tax cuts--that a "Keynesian" like him could not really be truly worried--provides powerful evidence to the reality-based community that you either (a) have not read Krugman with attention, or (b) are yourself trying to score cheap political points for your side--the opinions-of-shape-of-earth-differ side.

Step up your game some more, please.

Comments