Thursday, June 30, 2011


From Krugman's blog, some self-reflection on how well he's done analyzing the Great Recession:

3.5 Out of 4

I’d think of myself as having held, from early days, four main views that were at odds with a substantial number of other commentators. They were:

1. The slump would be very prolonged, with an extended period of jobless recovery.

2. As long as we were in the liquidity trap, interest rates would stay low despite large budget deficits.

3. Also, as long as we were in a liquidity trap, large increases in the monetary base would — as in the case of Japan — matter not at all for inflation or nominal GDP.

4. Sustained high unemployment would keep wages and core inflation low, and quite likely push us toward Japan-style deflation.

On the first three I think I was completely right. On the last, nominal wages have proved much more resistant to falling than I expected...


In short, I read Paul Krugman because he's quite often right.

I mean, of course, I also read him because, for a supporter of economic globalism, he's definitely left-of-center. He's an economist who likes to write about what happens to all the little people, you know, you and me, when all the big people, who don't give a fuck about little people at all, do their big people thing. He's very much, like, okay, this or that is going to help global corporations increase their profits, or this or that will increase trade, but it's going to affect average ordinary workers in a really bad way, which means the government needs to do this or that in order to offset such pain. Obviously, I like that kind of thinking.

As a Nobel Prize winning professor of the semi-science known as economics, however, he's much more than simply a compassionate guy: rather, he has his feet firmly planted in the field in which he works, backing up his observations with hard economic data, easily dismissing the middle school level rantings of politicians and pundits alike whose economic "analysis" dominates the public discourse.

But in the end, like I said, I like him because he usually gets it better than anyone else in the mainstream media. I don't always agree with him. For instance, for all his devastating criticisms of Obamacare, he supported it in the end as better than nothing--my take is that a multi-billion dollar giveaway to health insurance companies that doesn't cover one hundred percent of the uninsured, and without premium cost controls, and which forces everybody to pay their hard earned dollars to evil private corporations, is, in fact, worse than nothing. But I was able to come to that conclusion, the opposite of Krugman's, by reading his own honest and detailed analysis. That is, he's so honest with his writing that it's pretty easy to filter for ideological bias. He's quite a valuable resource.

So really, when you're reading a story on economics in the paper, or watching the pundits duke it out on television, you just don't have the full picture until you've read Krugman's take on it.