Paul Krugman on How did Economists get it so wrong ?
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Re: Paul Krugman on How did Economists get it so wrong ?
#2Paul Krugman continues to write the best articles about the state of the economy for laymen. I'm continually impressed (despite his years of research, training, and a nobel prize to boot) with his ability to explain what is happening and why.
Sometimes I lament the fact that instead of running the show, he's left to opine about the policies of others.
Re: Paul Krugman on How did Economists get it so wrong ?
#3Paul Krugman continues to write the best articles about the state of the economy for laymen. I'm continually impressed (despite his years of research, training, and a nobel prize to boot) with his ability to explain what is happening and why. Sometimes I lament the fact that instead of running the show, he's left to opine about the policies of others.
He seems kinda clueless to me. A whole article on the economic theory of recessions with no mention of malinvestment? He goes on at length about the efficient market hypothesis and bubbles yet never acknowledges that nobody can identify a bubble that has happened without government manipulation of the market. He goes on at length about Keynesian stimulus with no mention of its dismal failures, most notably in Japan.
There are always these rather ridiculous omissions and oversimplifications with krugman.
Re: Paul Krugman on How did Economists get it so wrong ?
#4Paul Krugman continues to write the best articles about the state of the economy for laymen. I'm continually impressed (despite his years of research, training, and a nobel prize to boot) with his ability to explain what is happening and why. Sometimes I lament the fact that instead of running the show, he's left to opine about the policies of others.
He seems kinda clueless to me. A whole article on the economic theory of recessions with no mention of malinvestment? He goes on at length about the efficient market hypothesis and bubbles yet never acknowledges that nobody can identify a bubble that has happened without government manipulation of the market. He goes on at length about Keynesian stimulus with no mention of its dismal failures, most notably in Japan.…
You have to consider that in this case he is writing for a general audience. You also have to consider that he is writing in an environment where he has to distinguish himself from Chicago school absolutists.
Also, I think your assertion that asset bubbles do not occur absent government interference is wrong; or at the very least leaves out the fact that often it is the speculators themselves who are most demanding that the government aid and assist the inflation of the bubble.
Re: Paul Krugman on How did Economists get it so wrong ?
#5Paul Krugman continues to write the best articles about the state of the economy for laymen. I'm continually impressed (despite his years of research, training, and a nobel prize to boot) with his ability to explain what is happening and why. Sometimes I lament the fact that instead of running the show, he's left to opine about the policies of others.
He seems kinda clueless to me. A whole article on the economic theory of recessions with no mention of malinvestment? He goes on at length about the efficient market hypothesis and bubbles yet never acknowledges that nobody can identify a bubble that has happened without government manipulation of the market. He goes on at length about Keynesian stimulus with no mention of its dismal failures, most notably in Japan.…
Krugman is a guy who preaches to the choir while ignoring anyone who might challenge him. Which is why he gets away with such omissions.
Take this paragraph...
"During the golden years, financial economists came to believe that markets were inherently stable — indeed, that stocks and other assets were always priced just right. There was nothing in the prevailing models suggesting the possibility of the kind of collapse that happened last year. "
That's a straw man if ever there was one. I don't think any economist has ever denied the reality of market corrections. In fact, while Krugman picks out a few choice quotes the fact is many, many economists have been warning about the housing bubble for years. He does eventually address this with one sentence on page 5 but then obscures the issue by quoting politicians denying the bubble (a politician is never going to predict doom and gloom even if they do see it coming)
In the end there were mistakes made in our economy but Krugman's using those mistakes to float a theory that the whole system is flawed even though the system created 26 years of relative prosperity. Just because deregulation went a little too far doesn't mean going in the complete opposite direction is wise.
Re: Paul Krugman on How did Economists get it so wrong ?
#6I just ordered Krugman's book, so this is a premature hypothesis but: I think Krugman says things he knows to be false but thinks are worth saying in order to pull the median voter towards his line of thinking. His NYT editorials are not only written for a general audience, but are written at such a simplified level that they are absurd. However, they are instantly touted across the blogosphere by self-styled progressives. His Nobel is a big stick to carry -- I think he is using it in a utilitarian (from his perspective) way.
Re: Paul Krugman on How did Economists get it so wrong ?
#7Paul Krugman continues to write the best articles about the state of the economy for laymen. I'm continually impressed (despite his years of research, training, and a nobel prize to boot) with his ability to explain what is happening and why. Sometimes I lament the fact that instead of running the show, he's left to opine about the policies of others.
He seems kinda clueless to me. A whole article on the economic theory of recessions with no mention of malinvestment? He goes on at length about the efficient market hypothesis and bubbles yet never acknowledges that nobody can identify a bubble that has happened without government manipulation of the market. He goes on at length about Keynesian stimulus with no mention of its dismal failures, most notably in Japan.…
I think that someone can have a meaningful discussion on recessions without mentioning the "dismal failures" of the Keynsians.
For the record, there are plenty of bubbles that have not been caused by government manipulation. For example, the Tulip bubble that happened in the Netherlands (http://en.wikipedia.org/wiki/Tulipmania) (not to mention bubbles caused by people like Madoff and other con men).
Also be careful. The government is always involved with any economic crisis and you can always blame a government action for making a bubble worse. If you believe that without a doubt the government is the cause of all bubbles, then no one will ever "prove" you wrong. If you are open minded and use the simplest explanation for a given set of facts (i.e., Occam's Razor), then you will find that not all bubbles have happened because of government manipulation.
Re: Paul Krugman on How did Economists get it so wrong ?
#8Paul Krugman continues to write the best articles about the state of the economy for laymen. I'm continually impressed (despite his years of research, training, and a nobel prize to boot) with his ability to explain what is happening and why. Sometimes I lament the fact that instead of running the show, he's left to opine about the policies of others.
Nobel prizes do not mean anything when polar opposite in economics thought have also won prizes, ie. Hayek.
Re: Paul Krugman on How did Economists get it so wrong ?
#9Earlier quoted context omitted.
He seems kinda clueless to me. A whole article on the economic theory of recessions with no mention of malinvestment? He goes on at length about the efficient market hypothesis and bubbles yet never acknowledges that nobody can identify a bubble that has happened without government manipulation of the market. He goes on at length about Keynesian stimulus with no mention of its dismal failures, most notably in Japan.…
I think that someone can have a meaningful discussion on recessions without mentioning the "dismal failures" of the Keynsians. For the record, there are plenty of bubbles that have not been caused by government manipulation. For example, the Tulip bubble that happened in the Netherlands ( http://en.wikipedia.org/wiki/Tulipmania ) (not to mention bubbles caused by people like Madoff and other con men). Also be careful…
Some people still say that the tulipmania is government's fault.
The story of Tulipmania is not only about tulips and their price movements, and certainly studying the "fundamentals of the tulip market" does not explain the occurrence of this speculative bubble. The price of tulips only served as a manifestation of the end result of a government policy that expanded the quantity of money and thus fostered an environment for speculation and malinvestment. This scenario has been played out over and over throughout history.
Re: Paul Krugman on How did Economists get it so wrong ?
#10I just ordered Krugman's book, so this is a premature hypothesis but: I think Krugman says things he knows to be false but thinks are worth saying in order to pull the median voter towards his line of thinking. His NYT editorials are not only written for a general audience, but are written at such a simplified level that they are absurd. However, they are instantly touted across the blogosphere by self-styled progres…
If economists ever expect us to view them even remotely in the same league as scientists, they may want to start by dropping the approach of trying to "persuade" and move on towards "proof".
Krugman's not bad, he writes good mainstream stuff, which is hard to do. I would be far more impressed if he had spent the last 5 to 10 years writing to the mainstream, screaming his head off about the dangers of the bubble we were in. And if his answer is that he wasn't certain is was a dangerous bubble, he can hand over his Nobel to me, because I sure as hell knew.