Sunday, February 14, 2010

A Deviation from "Paul Krugman is always right"

So, I'm a huge fan of Paul Krugman. I actually work in the same field as that in which he was awarded a Nobel, and his academic work is solid, and I'm generally whole-heartedly in agreement with most of his more recent economic policy analysis. Most attacks on Krugman turn out to be completely off-base -- such as the hack job by Ryan Avent of Free Exchange from a few weeks back. The real problem with Paul Krugman is that there is only one of him -- the world needs for there to be 10-20 Paul Krugmans -- smart, liberal economists who understand the big issues and are out there fighting for it.

However, I think he should have added a caveat to his latest post in which he argues that because the stimulus essentially ends at the end of this year, it's getting pulled away too fast. Thing is, I think the more important problem is that the Fed is not doing more, and certainly by some point in 2011 is likely to raise interest rates. We really are likely to be in a situation in which, even if Congress does more, the Fed might do less. Although I agree, in principal, that Congress should be doing more, I think the Fed is the more important guilty party at this point. We need a competitive devaluation of the dollar, and the way to do that is for the Fed to print money and buy out debt, with the added benefit that this would reducing our future debt payments. Incidentally, this would also put pressure on the Chinese to revalue -- more pressure than having our politicians jaw them but do nothing.

2 comments:

  1. re the need for 10-20 krugmans: you volunteering?

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  2. If there is one "go-to" economist on the American political left, it must certainly be Paul Krugman of Princeton and the New York Times.

    But lately, he's beginning to take fire from the left wing of the party who have a growing list of disputes with him. The folks over at firedoglake have broken into open warfare.

    But when you think about it, this was inevitable. Here are the important facts:

    1) In 1991, Krugman was awarded the John Bates Clark medal. This thing was named after one of the most notorious right-wing economists of American history. Clark's theoretical contribution to economic thought was to postulate that the Theory of Marginal Utility could be applied to everything--not just purchase decisions. The assumption long has been that the Clark winner would be a conservative and Krugman had written nothing that would scare off the selection committee.

    2) In early 1999, Krugman took money from Enron to brief them on economic and political issues. Nothing about what Enron was attempting to do as a business concern bothered him enough to turn down their cash.

    How a guy like this came to be considered a lefty only highlights how far to the extreme right our political elites have moved. Krugman isn't really a lefty, understand, he is simply the farthest left one can be and still be employed at the New York Times. So now when some of the blogging lefties have discovered that Paul Krugman is politically to the right of say, Richard Nixon, they have turned their fire on him.

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