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Monday Smackdown Watch: Will Paul Krugman and Company Ever Get an Acknowledgement of Substantial and Elementary Error from Mike Kinsley?

I would not bet on it...

Usually the Monday Smackdown Watch is focused on smacking-down me: to feature people who think that I have gotten something wrong, and who want to urge me to mark my beliefs to market.

But I am out of candidates. Step up your game, people!

So we do what we can:

Somewhat more than once a year Michael Kinsley writes another column about how hyperinflation threatens and (usually) about how Paul Krugman and company are mean, arrogant, and wrong. So last year when it happened I put a reminder in my tickler file to look around in May 2014 and see if:

  • Kinsley has done it again; or

  • Kinsley has marked his beliefs to market; admitted that Ben Bernanke and Janet Yellen are not Arthur Burns and G. William Miller, Barack Obama is not Gerald Ford; and recognized that taking Robert Samuelson and Allan Meltzer rather than Paul Krugman, Alan Blinder, and Larry Summers as your economic gurus is a really bad idea, atoning for which requires apology, correction, and a very substantial financial contribution to aid those Americans whom the intellectual climate he has promoted have robbed of their normal jobs.

So far we have neither: no additional doubling-down, no acknowledgement of error, no substantial charitable contributions to aid the excess unemployed...

If you have done something for four years in a row--even as the mountain of evidence that you are wrong piles up higher and higher--you do owe something more than radio silence to your readership: you have already double-double-double-double-doubled-down; so double-down again, or fold. Radio silence is undignified, and cheap.


Michael Kinsley: My Inflation Nightmare (March 30, 2010): "RIGHT-WING TALK RADIO these days is carrying...

...fewer commercials for second mortgages.... [more] commercials for gold.... The price of gold has gone from about $280 an ounce 10 years ago to about $1,140 today. The only reason to buy gold is fear that the currency may collapse.... Another way to say “collapse of the currency” is to say “hyperinflation.”... Thirty years ago, we peered into this abyss and pulled back just in time.... The columnist Robert Samuelson tells the story in his book, just out in paperback, The Great Inflation and Its Aftermath. Even 13 percent inflation was a nightmare....

If we are doomed to repeat this particular bit of the recent past, the press has failed in its self-imposed obligation to be the “first draft of history.” According to the considerable discussion of inflation on the Web, my alarm is misguided. Every economist I admire, from Paul Krugman and Larry Summers on down, is convinced that inflation will remain low for as long as we can predict.... The Congressional Budget Office (usually known by its nickname, “the nonpartisan Congressional Budget Office”) projects inflation rates of less than 2 percent for the next decade. Some say the real danger is the opposite: deflation....

I am not reassured. I worry that... there is a serious danger of another round of vicious inflation.... This time, inflation will be a lot harder to stop before it turns into hyperinflation. Whether Obama navigates these shoals successfully will be a big factor in his historic reputation. And journalists will be kicking themselves (and other people will be kicking journalists) for missing a disaster story on the level of Hurricane Katrina, if not 9/11 itself.... No, I’m not stashing gold bars under my bed. But that’s only because I lack the courage of my convictions.

My fear is not the result of economic analysis. It’s more from the realm of psychology. I mean mine.... Krugman says we need yet another dose of stimulus, and maybe he’s right. But this cure has been one ice-cream sundae after another. It can’t be that easy, can it? The puritan in me says that there has to be some pain. That’s not to say that there hasn’t been plenty of economic pain. But that pain has come from the recession itself, not the cure....

No one in a position to act has proposed a realistic way out of this debt, not even in theory. The Republicans haven’t. The Obama administration hasn’t. Come to think of it, even Paul Krugman hasn’t.... In 1979... the government ran a deficit of more than $40 billion—about $118 billion in today’s money. The national debt stood at about $830 billion at year’s end. But because of 13.3 percent inflation, that $830 billion was worth what only $732 billion would have been worth at the beginning of the year. In effect, the government ran up $40 billion in new debts but inflated away almost $100 billion....

Compared with raising taxes or cutting spending, just letting inflation do the dirty work sounds easy. It will be a terrible temptation, and Obama’s historic reputation (not to mention the welfare of the nation) will depend on whether he succumbs. Or so I fear. So who are you going to believe? Me? Or virtually every leading economist across the political spectrum? Even I know the sensible answer to that. And yet...


Michael Kinsley: Standard & Poor's is doing the U.S. a favor (April 2011): "Standard & Poor's, the bond rating service, has been widely mocked...

...for its recent prediction that the U.S. government may default on its bonds.... Some people say, relax and don't worry about it.... Standard & Poor's may know nothing that I couldn't find out, but it certainly knows more than I've bothered to find out. (And how about you?) And how its experts assess all this publicly available information is surely worth knowing, isn't it?...

The blitheness with which intelligent people say "Oh, we can always print more money" is horrifying. For one thing, it's not true. Sure, maybe once. But if we develop a reputation for paying our debts with a printing press, no one will want to hold our debt and no one will buy it.... When I last loosed a jeremiad on the danger of inflation, about a year ago, I was roundly upbraided by people who noted that in fact inflation was at record lows and seemed to be staying there. Inflation is still quite low, but in the past year it has increased by about a third, creeping up to 2.7%.... More alarming, the price of gold has now broken $1,500 an ounce....

Here's an easy prediction... people who have been talking about how the return of high inflation is terribly unlikely will start talking instead about how a bit of inflation is harmless or even healthy... it's already started.... Why are people talking this way?... If inflation were 5%, it would wipe out $715 billion; at 10%, nearly the entire projected annual increase in the national debt, even at its current record high of $1.6 trillion.


Michael Kinsley: About Rising Inflation, Please Remain Worried (January 2012):: "About two years ago I wrote an article saying...

...I was worried about inflation.... For this, I was widely ridiculed, and I’d like to take this opportunity to claim vindication... but I can’t. Inflation has been creeping up the past couple of years--from less than 2 percent to more than 3 percent--but that’s still pretty low. Nevertheless, I double down: Barring a miracle, there will be a fierce storm of inflation sometime in the next few years and it will wipe out a big chunk of the national debt, along with the debts of individual citizens, and the savings of others.

One reason I say this is that the arguments on the other side have shifted.... For two years I have been waiting for Paul Krugman... to tell us when we should reverse course. Krugman’s basic analysis... is persuasive. He thinks President Barack Obama’s $800 billion stimulus package in 2009 was much too small.... And then somehow we wasted all of last year arguing about how to reduce the budget deficit, instead of realizing that reducing the deficit--however you do it -- amounts to reducing the stimulus, when we ought to be increasing it. When the economy is robust again, it will be time to start paying down the debt. Fair enough. But how will we know when it’s time? And what evidence is there that Americans are capable of turning on this particular dime and suddenly tearing up their Social Security checks, their Medicare, Medicaid, disability checks, their military retirement pensions, and saying, “No, no, please take this money back and use it to pay down the national debt”? Krugman mocks the “theory of expansionary austerity”.... But is there nothing at all to the idea that a show of fiscal discipline or even legislative competence might be well received and rewarded by the markets? In Krugman’s scenario, he gets to play Santa Claus:

Ho ho ho. Goodness, gracious, don’t stop spending now! I’ll let you know when it’s time. Meanwhile, enjoy!

All this talk about “austerity” (even in print, he spits out the word) is a nefarious plot. But what is this plot supposed to achieve? Krugman is quick with the ulterior motive, but what is the austerity-mongers’ real motive?... I’ve never seen him explain this mystery. It must be much more fun to tell people that the solution to their addiction is another drink.... Time to raise taxes or cut spending? Time to stop borrowing? No, not yet (says Krugman). So, when? After eight years? Twelve? Soon you’ll be bumping into the next recession. Or do the annual deficit and the national debt simply not matter? If that’s the case, why do we pay taxes at all?... Krugman is the go-to guy for liberal-left solutions to economic puzzles. He says the distributional effects of the national debt are “a very different kettle of fish.” Maybe so, but it still stinks.


Michael Kinsley: Paul Krugman's Misguided Moral Crusade Against Austerity (May 2013): "This debate has been going on enjoyably since about 2008, with Krugman almost single-handedly swatting away one feral-looking austerian after another, maddened by their failure to do as he says. He did not write the paper about how austerity kills, but it fits comfortably with everything else he’s been writing on the subject.... Bottom line: Austerity is immoral....

Krugman is right: Bad economic times are bad for your health. People get depressed and commit suicide. They drink and ruin their livers. They don’t buy their prescription drugs or see the doctor when they should in order to save money. They lose their jobs, come home, and murder their spouses. And austerians fairly explicitly favor bad times. Or at least they favor worse times in the short run than do their rivals, the anti-austerians or (why deny him the glory?) Krugmanites. So austerity does kill in this sense. But only in this sense. Austerians believe, sincerely, that their path is the quicker one to prosperity in the longer run.... They remember the lessons of Paul Volcker and the Great Stagflation of the late 1970s. “Stimulus” is strong medicine—an addictive drug—and you don’t give the patient more than you absolutely have to....

Krugman now says that what he is against is “premature” fiscal austerity. So is everybody. They just disagree on what is “premature.” You know what they say: Disputes in academia are especially vicious because the stakes are so small. The stakes in the austerity debate—the actual differences of opinion—get smaller and smaller even while the argument itself gets larger and louder. Krugman sometimes writes as if, right or wrong, his view is the courageous one, held by folks willing to stand up to the plutocrats and their lackies. But his message to all classes is: party on.... How much courage does that take? The really tough message—once again, right or wrong—is the one the austerians have to deliver, which is that the party is over.... What’s in all this for the austerians? If Krugman is right that the results of austerity are harmful and potentially catastrophic, why should the elites who he says have the real power be pushing it so hard?...

Krugman also is on to something when he talks about paying a price for past sins. I don’t think suffering is good, but I do believe that we have to pay a price for past sins, and the longer we put it off, the higher the price will be. And future sufferers are not necessarily different people than the past and present sinners. That’s too easy. Sure let’s raise taxes on the rich. But that’s not going to solve the problem. The problem is the great, deluded middle class—subsidized by government and coddled by politicians.... Austerians don’t get off on other people’s suffering.... But the austerians deserve credit: They at least are talking about the spinach, while the Krugmanites are only talking about dessert.


Michael Kinsley: Michael Kinsley vs. the Anti-Austerians (May 2013): "Krugman himself started this round.... Soon he was piling on and calling me all sorts of names... said I suffered from “lack of compassion, sure; an inability to imagine what it must be like for someone less fortunate than oneself and one’s friends, definitely.“... Let me propose... maybe austerians really, sincerely want what’s best for America and the world, and really believe that theirs is the better path than Krugman’s. Maybe austerians—poor, deluded creatures that we are—actually think that their path will result in less pain, not more....

If Paul Krugman wants to get into a contest about who has spent more time in a comfortable, air-conditioned office dreaming up new ways for the government to spend someone else’s money on programs to help a third party, I’m pretty sure I would win that one. I’ve been at this liberal game for a long time (an Atlantic blogger, who thinks he’s going to live forever, had the bad manners to point out that I’m over 60).... On the other hand, if Krugman means by “lack of compassion” that I don’t devote nearly as much of myself as I should to helping others directly, he’s absolutely right. I assume from the way he writes that he is out there most Sunday mornings painting poor people’s houses, serving up soup and making sandwiches. And I congratulate him for it....

And while we’re impugning motives, what about the motives of the anti-austerians like Krugman? Are they purposely keeping the economy sputtering until they can take power and take credit? Krugman treats this ludicrous idea seriously when the other side stands accused...


I think the rebuttal microphone is best given to Dan Drezner:

Daniel Drezner: Sometimes a factual error is just a factual error: "I've spent a rather alarming portion of this week...

...wading into intellectual pissing matches, so I'm loath to respond to Michael Kinsley's response to last week's brouhaha over austerity policies. But one paragraph does merit some pushback.... Kinsley writes....

There are two possible explanations. First, it might be that I am not just wrong (in saying that the national debt remains a serious problem and we’d be well advised to worry about it) but just so spectacularly and obviously wrong that there is no point in further discussion. Or second, to bring up the national debt at all in such discussions has become politically incorrect. To disagree is not just wrong but offensive....

Kinsley assumes that it must be the second explanation, and then goes on from there.... Speaking for myself... Kinsley was "spectacularly and obviously wrong."... Almost everything I wrote in my response to Kinsley I knew at age 18 after taking Economics 101 in college. Kinsley's motivation for thinking that the austerians have a point... is wrong for three reasons, one pedantic and two substantive.

First, to be pedantic, the austerity debate is about the wisdom of using expansionary fiscal policy... to alleviate downturns. Paul Volcker was... responsible for setting monetary policy... had nothing to do with fiscal policy. This is a distinction that I learned in my first few lectures on macroeconomics. So either Kinsley phrased this badly or he's confused about what this debate is about.

The substantive errors.... First, during the period that Kinsley seems to find so relevant--the late 70s--you discover that the budget deficit as a percentage of GDP was shrinking and not growing.... I'm not sure where Kinsley is getting this notion that expansionary fiscal policy is responsible for the high inflation of the 1970s.... Compared to the 1980s, the 1970s was a period of fiscal probity... there was that whole expansionary monetary policy/commodity price shock thing happening... which I learned about from my Econ 101 textbook....

Second, contra Kinsley (and Charles Lane while we're at it), stimulus is not an addictive medicine... budget deficits expand... during recessions and then shrink... again as the economy recovers.

Look, this isn't rocket science--Kinsley made an argument about austerity that got a lot of basic economic facts about the 1970s and the current era very, very wrong. Dare I say, spectacularly and obviously wrong. So there's really no point in further discussion.

But for me the astonishing thing is that Kinsley's claim:

Austerians don’t get off on other people’s suffering...

is separated by only three lines from:

I do believe that we have to pay a price for past sins, and the longer we put it off, the higher the price will be. And future sufferers are not necessarily different people than the past and present sinners. That’s too easy. Sure let’s raise taxes on the rich. But that’s not going to solve the problem. The problem is the great, deluded middle class—subsidized by government and coddled by politicians...

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