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