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The Type D Economist. Krugman melds motive and consequence into deception. (More Like type BS)
NRO ^ | October 08, 2003, 9:34 a.m. | Donald Luskin

Posted on 10/08/2003 8:48:01 AM PDT by .cnI redruM

There's been a lot of chatter on the web, and I've received lots of e-mails from readers, concerning Arnold Kling's open letter to Paul Krugman, posted yesterday on Tech Central Station. I hate to look a gift horse in the mouth — it's great to see an economist take on Krugman in public. But truth be told, I think Kling's critique fails to come to grips with what's wrong with Paul Krugman.

For the moment, I'm afraid, I'll have to withhold Kling's membership in the Krugman Truth Squad.

Kling sets up a framework in which economic propositions can be argued in two different styles. What he calls "Type C" arguments are about the consequences of a particular policy (e.g., "tax cuts will stimulate the economy"). What he calls "Type M" arguments are the motives behind a particular policy (e.g., "tax cuts are just a sop to rich Republicans").

Kling believes that Krugman cheapens economic discourse by failing to make Type C arguments (which can be debated rationally, if not to a definitive conclusion) in favor predominantly of Type M arguments (which defy rational debate, and crowd out analysis of real policy dynamics).

But if it were that simple, Krugman wouldn't be America's most dangerous liberal pundit.

The fact of the matter is: Krugman makes both kinds of arguments all the time. Kling cites Krugman's Type M argument against tax cuts offered in his recent New York Times Magazine article, "The Tax Cut Con." In that piece, Krugman argues that Republican tax-cutters want to "starve the beast" and put an end to New Deal-era social programs. But in that article Krugman also makes many Type C arguments. For example, he writes that tax cuts do not lead to faster economic growth, citing average GDP growth following Reagan's tax cuts in the 1980s.

On closer analysis, Krugman's rhetorical effectiveness lies primarily in his ability to do a change-up between Type C and Type M arguments within a single column; he uses his facility as an economist to dazzle the reader with the Type C argument before slipping in the Type M argument — whether or not the two are really related.

In "The Tax Cut Con," Krugman uses many Type C arguments to establish that tax cuts have no benefits whatsoever, and therefore all the claimed benefits amount to lies. This sets him up to offer the Type M argument to "explain" why the lies were being told. In this sense, the Type M argument is, in Krugman's hands, a Type C argument at another level. What Kling distinguishes as mere motive is just a hidden consequence.

But the real problem, which Kling either doesn't understand, doesn't choose to understand, or doesn't choose to deal with, is that many of Krugman's Type C and Type M arguments are actually Type D arguments — deceptions. For example, the Type C argument demonstrating that the Reagan's tax cuts produced no faster economic growth necessitates that Krugman hand-picks beginning and ending dates on the economic timeline to produce the numbers he desires. The dates he cites, however, do not (contrary to his explicit claims) correspond to business cycle peaks. Nor did the tax cuts exist in all the years he includes. When the proper years are chosen, faster GDP growth can unambiguously be observed. (See the analysis on my blog, The Conspiracy to Keep You Poor and Stupid.)

The Type M argument in question here is really a Type D argument. Throughout the article, and even more so in the introductory material to Krugman's new book, The Great Unraveling, Krugman portrays the "starve the beast" approach to controlling government spending and reducing the size of government as an attempt to fundamentally undermine America. Thus he not only argues as to motives, but he characterizes those motives in a deceptive way in order to impugn them.

For example, Krugman is fond of quoting "starve the beaster" Grover Norquist out of context. Norquist, he says, wants to shrink government "to the size where I can drag it into the bathroom and drown it in the bathtub." Milton Friedman avowedly has the same aims, yet he expresses himself less colorfully — and Krugman does not quote him.

If Krugman were an honest writer, I would see nothing wrong with his commenting on motives. I agree with Kling that there is little point in trying to argue against a good consequence just because it sprang from a bad motive (or vice versa, as is more often the case in the government sphere). Yet in analyses that are both economic and political at the same time, motive is not trivial. It can help explain the seeking of certain consequences, and help forecast the consequences that will be sought in the future.

MY TYPE Kling, in fact, has made interesting Type M arguments himself. In a column posted on Tech Central Station scarcely more than a month ago, Kling correlated the number of years spent outside academia in the careers of various economists — including Krugman and himself — with each economists' liberalism or conservatism: the very wellspring of their motives. In the same column, Kling writes,

The Democratic Party is opposed to tax cuts. Is this a matter of principled concern for the fiscal health of the United States, or is it because "the people" that dominate the party platform — the teachers' unions; the American Federation of State, County, and Municipal Employees; and opponents of Social Security reform — all feed from the government trough?

I see nothing wrong with such statements — either in Kling's work or in Krugman's — provided the statements are honest. So I have to protest when Kling writes in his open letter that, in response to Krugman's reliance on Type M arguments, "many of your opponents are stooping to your level."

I don't know if Kling is talking about me specifically, but I must say that I receive a lot of feedback to this effect. Some readers think I should do nothing but take on Krugman's Type C arguments with my own Type C counterarguments, and refrain either from fact-checking Krugman's arguments or speculating as to Krugman's motives. Well, I don't see it entirely that way.

I offer plenty of my own Type C arguments, although not always in the same columns in which I criticize Krugman. Those critiques are intended primarily to expose Krugman's Type D arguments — in other words, to reveal his lies. You can't have a rational battle of Type C arguments if one of the contestants lies. We have to start there. And since I'm just idealistic enough to continue to be shocked when people flat-out lie, I think it's fair game to speculate from time to time as to the liar's motives.

Strangely, Krugman would say precisely the same thing about himself. He would argue that he is exposing President Bush's lies, and then revealing the motives behind them.

So, am I stooping to Krugman's level? No. Because what Krugman says are Bush lies are not really lies at all — they are philosophical or policy disagreements. With the imprimatur of his Princeton professorship and the New York Times, Krugman dares to hold his own opinions so sacred that to differ with them is in fact to lie. Hence, we often find Krugman lying about lying.

What's Krugman's motive? Partisan politics, of course. The partisan end justifies the lying means. We can just as easily say that Krugman has a Type D personality.


TOPICS: Business/Economy; Editorial; Philosophy
KEYWORDS: damnlies; economicstatistics; krugman; lies
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To: Norse
Any particular papers that you find especially problematic? I'd like to see what makes him so horrible in your view.
21 posted on 10/08/2003 3:56:08 PM PDT by TopQuark
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To: liberallarry
"Krugman has a 'big league' NYTimes gives it to liberal shills" Please. Even you can't believe that. They chose him because he had great credentials which they believed would make him effective in a very limited, specialized arena. That he's turned into PAUL KRUGMAN DREADED NEMESIS OF THE RIGHT is entirely due to his extraordinary talents.

ROFLMAO... Even *you* can believe the NYTimes doesnt hire them for their rabid liberal views!!! name 1 columnist (calumnist :-) ) added in the last 20 years who is *not* a Liberal shill. The "extraordinary talents" of Krugman are no different than Frank Rich, or Bob Herbert (sp?) or Dowd or the rest of em ... a Carvellian turn of phrase that constantly demeans and attacks the Republicans and the moderate-right side of issues. Krugman spreads economic illiteracy with each column. It's not 'nitpicking' to point out a man that the left weirdly worships is constantly mis-stating facts.

22 posted on 10/08/2003 4:33:01 PM PDT by WOSG (CALI RECALL VICTORY ! POWER TO THE PEOPLE!)
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To: WOSG
Well, if you believe that all liberals are "shills" or all liberals are of equal value (zero) then the conversation is pointless.

Krugman is an excellent exponent of the liberal point of view and the times hired him because of both his excellence and his liberalism.

23 posted on 10/08/2003 5:19:56 PM PDT by liberallarry
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To: TopQuark
Sure, have you read his book, "The Great Unraveling?"

He basically slams the ideas of tax cuts as a "con" as he refers to them as the title for one of the chapters in the book. He has no idea of why people produce in society (because they have incentive) and does not understand the powers that tax cuts have when it comes to incentives. Also, the man is a meglomaniac/egomaniac who disregards ideas from people if those people don't share his esteemed credentials.

Also the man claims that Bush is "starving" the government when in reality Bush hasn't cut anything nearly at all. He claims that because we have a deficit, the government is being starved, which is really funny logic.

Now the man is saying that we are headed for an economic disaster because of Bush's tax cut policies, which is a complete load of garbage
24 posted on 10/08/2003 7:02:48 PM PDT by Norse
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To: Norse
That book he wrote as a columnist.

Which of Krugman's papers in the refereed journals have you read, and can recommend to me, that support your claim that he is the worst economist of the century?

25 posted on 10/08/2003 7:07:13 PM PDT by TopQuark
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To: liberallarry
I am glad you agree that NYT hired him for his liberal views. I would faint if the NYT hired on Sowell or Walter Williams. Too bad the media doesnt have a such for this black economist to "succeed":

http://www.jewishworldreview.com/cols/williams.html


Slight correction - "Krugman is an excellently shrill exponent of the liberal point of view and the times hired him because of both his excellence in shrillness and his liberalism."


DEFINITION OF SHRILL EXTREMIST. Let's take this Krugman frothing:

"Iraq's reconstruction, by contrast, remains firmly under White House control. And this is an administration of, by and for crony capitalists; to match this White House's blithe lack of concern about conflicts of interest, you have to go back to the Harding administration. That giant, no-bid contract given to Halliburton, the company that made Dick Cheney rich, was just what you'd expect.

And even as the situation in Iraq slides downhill, and the Iraqi Governing Council demands more autonomy and control, American officials continue to block local initiatives, and are still trying to keep the big contracts in the hands of you-know-who."
- Paul Krugram, shrill-extremist-in-residence, NYSlimes

http://query.nytimes.com/gst/abstract.html?res=F10B14FC35590C738FDDA00894DB404482

THIS ARTICLE HAS FALSEHOODS OUT THE WAZOO:
"Iraq's reconstruction, by contrast, remains firmly under White House control." FALSE. *CONGRESS* has pursestrings, and in the executive branch DOS and DoD are running things. Of course, the President is leader of the executive branch, so you expect him to have final say on policy, but that malice

" And this is an administration of, by and for crony capitalists; to match this White House's blithe lack of concern about conflicts of interest, you have to go back to the Harding administration."

This pile of dung written by Krugman ignores that ethically corrupt administration, the Clinton administration: It gave $400m in DoD to global crossing, which just happened to give millions to Terry McAwful and other Clintonites. The same administration that got payoffs from telecom firms the day before signing off on telecom legislation; Clinton also met tort lawyers for dinner in 1995 and got a fat check right before vetoing tort reform. He met LORAL CEO in Feb in the White House just at the time that space technology to China needed to be approved. Lo and behold, a Gray Davis-like convergence of money and decisions. This is the tip of the iceberg vis a vis China- "Year of the Rat" and old free republic articles can give you much much more. And this doesnt even touch Clinton's various arkansas dirty laundry (his regulatory support of madison S&L that blew up and cost taxpayers $50 mill) and personal/politico corruptions such as illegal DoD releases of info on Linda Tripp and harrassment of 'bimbos' who threatened to erupts, etc. ... conclusion: Clinton puts Harding in the dust in the corruption department, making Clinton's administration the most corrupt in history. Only a partisan liberal shill, when faced with the plain facts, would deny it. Before you doubt me --- go back and read the LIBERAL PAPERS when Clinton was finally out of office, power was not at stake, and the disgusting sale of Presidential pardons was made public (including 6 figure payoffs to Clinton's brother, and the visit by Marc Rich's wife to Clinton).

All that - and Krugman has amnesia. He is too full of hate for Bush he has no time for Clinton's follies.

Compared to this, you have a Bush admin that when Enron was drowning and wanted help, Bush admin did the ethical thing - nothing. Bush then signed the most sweeping corporate governance law in a generation. (In fact, IMHO a bit too sweeping on some matters, as most regulation is.)

"That giant, no-bid contract given to Halliburton, the company that made Dick Cheney rich, was just what you'd expect."

That slimy insinuation misses a few basic points: like (a) Cheney is no longer with Hallibruton, (b) the contract was made by DoD, (c) Halliburton and Schlumberger are the *only* firms in the world who are *qualified* to certain kinds of oil sector service work involved, (d) the contract was only no-bid for short-term (necessary due to, long-term contract is being re-bid in a competitive process.

So, you have a contract made to highly qualified contractors for very serious reasons by non-political bureaucrats in DoD who have nothing to do with the VP who in turn has *no financial interest* in the company involved. Krugman mentions none of this, he insinuates the opposite.

This is no careful academic; this is a shrill partisan extremist who happens to be a professor. (Well, there are plenty of professors who are shrill partisan extremists; I've run into a few.)

"And even as the situation in Iraq slides downhill,"

UTTERLY FALSE. Problems have reduced, the casualty rate is going down, while we capture more and more bad guys, and the lights are now on at pre-war levels, and security has improved alot. NYTimes has been expert at reproting Iraq in the most negative way. Congressman have come back and said the media is lying to us.

" and the Iraqi Governing Council demands more autonomy and control,"

His whole phrasing mischaracterizes the relationship. ... the IGC members have said that their relations with American administration is quite good, they want to take on responsibility and yet agree with administration on general pace and timing of evolution of sovereignty.

" American officials continue to block local initiatives, and are still trying to keep the big contracts in the hands of you-know-who."

More lies ... the contracts are determined through apolitical channels and an open bidding process ... and so it goes.

ALSO ...

http://209.157.64.200/focus/f-news/967244/posts

According to American economics professor Paul Krugman, public services have been cut back in many areas to the benefit of "tax breaks for the rich."

.... there he goes again ...
26 posted on 10/08/2003 7:52:22 PM PDT by WOSG (CALI RECALL VICTORY ! POWER TO THE PEOPLE!)
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To: WOSG
Sowell is in a class by himself. I doubt he ever sought employment with the N.Y. Times, but if he had ... ?

He and Krugman have more in common than you think. They wrote like academics when writing for an academic audience...and like partisans when writing for the general public. How else to do it?

And here's Krugman's world view

AN INTERVIEW WITH PAUL KRUGMAN....

Call it shrill if you want to but it's an excellent exposition of a certain point of view.

27 posted on 10/08/2003 9:53:13 PM PDT by liberallarry
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To: liberallarry
Sorry, I wont bite.

Sowell's Marxism and his book "Knowledge and Decisions" is wise, precise *and* passionate in its own way.
But never shrill and partisan he'd throw out fibs like Kurgman is.

Compare a Krugman froth-at-the-mouth with this from Sowell:

http://www.intellivu.com/main.asp?brand=&fnum=117&pathb=/articles1/tsowell/sowell071503.htm
" ..In other words, soak-the-rich tax rates do not in fact soak the rich. They soak people who are currently earning the rewards of having contributed to the economy. High income taxes punish people for becoming prosperous, not for having been born rich."

Very simple. He makes his points and backs it up with facts.
He critiques Democrats, but gently and certainly not accusing them of being child molesters or greedheads or part of some cabal to undo American democracy.

I dare you to pull apart this column the way I did Krugman's ; you cant. They are not comparable.

Sowell talks at the level of ideas and ideals, but Krugman in his NYT columns is the political equivalent of tabloid TV, he is talking about personalities, motivations, dragging up . And I note you dont argue the substantive points but change the subject. If he's doing something else in his other work, that's another matter, but calling the dreck he writes 'great' just because he's an academic is very weak - "argument from authority".

28 posted on 10/08/2003 10:44:26 PM PDT by WOSG (CALI RECALL VICTORY ! POWER TO THE PEOPLE!)
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To: WOSG
The difference between us is one of degree - does Krugman's partisanship cross the line into tabloid smears?

Leet me try to establish some common ground which will keep the discussion manageable - I don't have the time or interest to research everything written by Sowell and Krugman.

I hope you'll agree to the following

Krugman's academic writings are considered by his peers to be first rate
His writings for the general public are - rightly - written to a different standard.
I don't have to show that Krugman is the equal of Sowell. He can be different and inferior and still be considered an excellent exponent of his point of view.

I'd like to confine my arguments to just the stuff you and I have cited even though the man should - properly - be judged by his entire body of work (Everyone, after all, has good days and bad days).

You use the case of Iraqi reconstruction to try to make your point. You say Krugman tells a bunch of lies

1) Reconstruction is under control of the DoD and DoS, not the White House. But then you agree that both actually are under the control of the White House. Not much of an argument
2) Krugman says the Bush administration corruption is comparable to Harding's. You reply that he's totally ignored corruption under Clinton and cite a long list of Clinton Administration failings as evidence of Krugman's over-the-top partisanship. In a short article Krugman cannot be expected to deal with all aspects of his argument and he deals with this objection elsewhere (in the interview I cited, for example).
3) Cheney is no longer employed with Halliburton. So what? It's quite plausible to believe he's still acting to benefit his friends and former employer.
4) So, you have a contract made to highly qualified contractors for very serious reasons by non-political bureaucrats in DoD who have nothing to do with the VP who in turn has *no financial interest* in the company involved. Krugman mentions none of this, he insinuates the opposite. - Just plain silly.
5) Your arguments about the special qualifications of Halliburton and the short-term nature of the contract could be correct. Krugman could be wrong. So what? Being wrong doesn't make him a tabloid hack.
6) Iraqis have written articles supporting Krugman on this - saying that their qualified engineers who could be hired for a fraction of what's being paid Halliburton and who need the work are being deliberately ignored. I posted the article elsewhere but will not look for it. I hope you'll take my word - without necessarily agreeing that the Iraqi author who wrote about it was right.

The point is that when I go through your stuff I don't see the same things you do. In particular I don't see Krugman as an unqualified or ignorant liar. I see a partisan making plausible arguments supported by reasonable factual evidence.

29 posted on 10/09/2003 8:09:25 AM PDT by liberallarry
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To: WOSG
you have a Bush admin that when Enron was drowning and wanted help, Bush admin did the ethical thing - nothing.

So you say. But

"When India threatened to abrogate energy contracts with Enron (deals that forced that country to pay outrageous prices for electricity), top officials in the Bush Administration insisted that the contracts be honored. Conracts that are as disadvantageous to a country as the Enron contracts were to India naturally raise suspicions of corruption." from "Odious Rulers, Odious Debts", Joseph Stiglitz, Atlantic Monthly, November 2003.

In other words India wanted to do what McClintock proposed to do in California. Did the Bush Admin. do the "ethical thing" here?

30 posted on 10/09/2003 9:54:35 AM PDT by liberallarry
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To: liberallarry
wow, insisting that contracts be honored ... what a scandal. NOT! LOL!

As for Cali, ask the FERC about that.
They too think legal contracts should be honored.


31 posted on 10/09/2003 7:42:23 PM PDT by WOSG
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To: WOSG
Fair enough. Both points of view are legitimate.
32 posted on 10/09/2003 8:45:21 PM PDT by liberallarry
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To: liberallarry; WOSG
Note: The latest copy of the following article can be found at http://home.netcom.com/~rdavis2/luskin2.html

In his article on the National Review Online at http://www.nationalreview.com/nrof_luskin/truthsquad200310080934.asp, Donald Luskin, describes why Krugman is a "Type D Economist". He states:

But the real problem, which Kling either doesn't understand, doesn't choose to understand, or doesn't choose to deal with, is that many of Krugman's Type C and Type M arguments are actually Type D arguments — deceptions. For example, the Type C argument demonstrating that the Reagan's tax cuts produced no faster economic growth necessitates that Krugman hand-picks beginning and ending dates on the economic timeline to produce the numbers he desires. The dates he cites, however, do not (contrary to his explicit claims) correspond to business cycle peaks. Nor did the tax cuts exist in all the years he includes. When the proper years are chosen, faster GDP growth can unambiguously be observed. (See the analysis on my blog, The Conspiracy to Keep You Poor and Stupid.)

Following is an excerpt of Luskin's analysis on his blog:

Do tax-cuts stimulate economic growth? Examining Ronald Reagan's famous supply-side tax-cuts, Krugman says

"...between 1979, when the big slump began, and 1989, when the economy finally achieved more or less full employment again, the growth rate was 3 percent, the same as the growth rate between the two previous business cycle peaks in 1973 and 1979. ...Nothing in the data suggests a supply-side revolution."

First, in picking 1979 and 1989 as his endpoints, Krugman is making up business cycles as he goes along. According to the official National Bureau of Economic Research business cycle dating, neither of Krugman's two years included a business cycle peak! What's worse, as reader Chris Huskins noted in an email to me, Krugman has included two years before Reagan was even president -- and his tax cuts didn't start taking effect until 1982.

If Luskin had bothered to do a google search, he would have quickly found that Krugman is NOT "making up business cycles as he goes along". Searching for "business cycle peaks" "1979 and 1989" turns up a number of matches. The most noteworthy are a couple of matches from the Federal Reserve Bank of San Francisco. The paper at http://www.frbsf.org/econrsrch/econrev/2000/article1.pdf states:

Figure 1 plots two general economic indicators of the business cycle — civilian unemployment rates and median real family income — that demonstrate this point. Outside of California, business cycle peaks (i.e., low points in unemployment) in 1973, 1979, and 1989 were followed by business cycle troughs in 1975, 1982, and 1992 for most of the U.S (Panel A).

Now there do appear to be more matches for the years 1980 and 1990, the business peaks given by the National Bureau of Economic Research. This seems to indicate that there is more than one way to measure business cycles. In any case, Krugman obviously did not make his business cycles up. In any case, Luskin continues:

A fairer test would be to look at the first whole official business cycle after Reagan started cutting taxes. That would be from the trough in November 1982 to the subsequent trough in March 1991. And what do you know -- that cycle's average GDP growth rate was 3.7% -- sharply higher than the 3% Krugman got with his invented business cycle.

He pulls a similar trick to laud President Clinton's tax increases:

"...here was a president who sharply raised the marginal tax rate on high-income taxpayers, the very rate that the tax-cut movement cares most about. And instead of presiding over an economic disaster, he presided over an economic miracle."

Apparently Krugman, holding himself out as an historian of the tax-cutting crusade, didn't hear about that cut in the capital gains tax rate from 28% to 20% that a Republican congress forced down President Clinton's throat in 1997. That's an even bigger cut in the capital gains tax rate than the one Bush put in place this year -- and it triggered the best growth years for the economy under Clinton. GDP growth from Clinton's tax-hikes to the capital gains tax-cut averaged 3.4%, below the growth rate of the Reagan years (and those were a full business cycle, including a recession). From the capital gains tax-cut to the end of Clinton's presidency, growth was 3.7% -- which happens to be exactly back to the higher levels of the Reagan years (thanks to a Republican tax-cut).

The previous excerpts contain a number of conflicting figures from Krugman and Luskin. I therefore constructed the following table to check the accuracy of each of their claims:

         AVERAGE ANNUAL INCREASE IN REAL GROSS DOMESTIC PRODUCT
               (GDP in billions of chained 1996 dollars)

                                      Percent Change
                             --------------------------------
    Year        Real GDP                         Total
-----------  --------------  Annual-  Average Change /
First  Last   First    Last     ized   Annual # of Yrs  Claim  Claimant
-----------  --------------  --------------------------------  --------
 1973  1979  4123.4  4912.1     2.96     2.99     3.19   3.00  Krugman
 1979  1989  4912.1  6591.8     2.98     3.01     3.42   3.00  Krugman
 1982  1991  4919.3  6676.4     3.45     3.47     3.97   3.70  Luskin
 1993  1997  7062.6  8159.5     3.68     3.68     3.88   3.40  Luskin
 1997  2001  8159.5  9214.5     3.09     3.10     3.23   3.70  Luskin
 1997  2000  8159.5  9191.4     4.05     4.05     4.22

 1960  1973  2376.7  4123.4     4.33     4.35     5.65         Selected
 1973  1980  4123.4  4900.9     2.50     2.53     2.69         Business
 1980  1990  4900.9  6707.9     3.19     3.21     3.69         Cycle
 1990  2001  6707.9  9214.5     2.93     2.94     3.40         Peaks

 1961  1970  2432.0  3578.0     4.38     4.40     5.24         Selected
 1970  1982  3578.0  4919.3     2.69     2.72     3.12         Business
 1982  1991  4919.3  6676.4     3.45     3.47     3.97         Cycle
 1991  2001  6676.4  9214.5     3.27     3.28     3.80         Troughs

Source: 2003 Economic Report of the President, online at
        http://w3.access.gpo.gov/eop/;
        National Bureau of Economic Research (business cycle peaks
        and troughs) at http://www.nber.org/cycles.html
The table calculates the average annual growth of the real GDP via three methods, resulting in three different values. The first is the annualized growth rate. This is the rate that, if it had occurred in every year of the specified span, would have resulted in the actual growth that occurred over the entire span. The second value is the average annual growth rate, obtained by dividing the sum of the annual growth rates by the number of years in the span. As can be seen, the first and second values are very nearly identical. The last value is obtained by simply dividing the total growth rate by the number of year in the span. This tends to overstate the true annual growth rate since it does not account for the compounding effect of the annual growth rate. It should therefore not be used and is provided just for illustrative purposes.

In any case, the first two lines show the two claims made by Krugman. Putting aside his choice of business cycle peaks, he stated that "the growth rate was 3 percent" from 1979 to 1989 and "the same" from 1973 to 1979. Rounding off to the nearest tenth, he was right on the money.

The next three lines show the three claims made by Luskin. In the first one he stated that the growth rate from "November 1982 to the subsequent trough in March 1991" was "3.7%". However, the table above shows the growth rate from 1982 to 1991 to have been just short of 3.5%.

Luskin's second claim was that "GDP growth from Clinton's tax-hikes to the capital gains tax-cut averaged 3.4%, below the growth rate of the Reagan years (and those were a full business cycle, including a recession)". Clinton's tax-hikes were in 1993 and, as Luskin states, the capital gains tax-cut was in 1997. There was no recession during this four-year period so it's unclear what Luskin was saying parenthetically above. In any case, the table shows that the growth rate for this period was about 3.7%, higher than the 3.4% claimed by Luskin.

Finally, Luskin's third claim is that "From the capital gains tax-cut to the end of Clinton's presidency, growth was 3.7%". Since Clinton was president until January, 2001 and it was he that submitted the 2001 Budget, I assume that "the end of Clinton's presidency means 2001. The table shows that the growth rate from 1997 to 2001 was about 3.1%, not the 3.7% that he claims. If Luskin had been referring to 1997 to 2000, before the end of Clinton's presidency, then the growth rate would have been about 4.05%, higher than Luskin's claim.

In summary, Krugman appears to be batting 2 for 2 in his claims and Luskin appears to be batting 0 for 3. Now, one could claim that Krugman's choice of business cycle peaks was questionable and that it was in his favor. However, all three of Luskin's errors were in his favor. Unlike Luskin did with Krugman, I do not jump to the conclusion that this errors were intentional. Just as there are different definitions of business cycle peaks, there is a chance that Luskin is using slightly different values of real GDP. However, I would call on him to give his sources and show precisely where his numbers came from. This is especially important since he is accusing others of pushing deceptive data.

33 posted on 10/11/2003 2:03:05 AM PDT by remember
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