We have occasion to comment on some strange written offerings from Paul Krugman. Yeah, I know, “dog bites man.” Nevertheless, some discussion is in order.
First off, let’s take a look at Krugman’s latest editorial, which contains the following:
Take the question of helping the unemployed in the middle of a deep slump. What Democrats believe is what textbook economics says: that when the economy is deeply depressed, extending unemployment benefits not only helps those in need, it also reduces unemployment. That’s because the economy’s problem right now is lack of sufficient demand, and cash-strapped unemployed workers are likely to spend their benefits. In fact, the Congressional Budget Office says that aid to the unemployed is one of the most effective forms of economic stimulus, as measured by jobs created per dollar of outlay.
But that’s not how Republicans see it. Here’s what Senator Jon Kyl of Arizona, the second-ranking Republican in the Senate, had to say when defending Mr. Bunning’s position (although not joining his blockade): unemployment relief “doesn’t create new jobs. In fact, if anything, continuing to pay people unemployment compensation is a disincentive for them to seek new work.”
In Mr. Kyl’s view, then, what we really need to worry about right now — with more than five unemployed workers for every job opening, and long-term unemployment at its highest level since the Great Depression — is whether we’re reducing the incentive of the unemployed to find jobs. To me, that’s a bizarre point of view — but then, I don’t live in Mr. Kyl’s universe.
Now see, this is just bizarre, because it would appear that Krugman forgot his own writings on the subject. Lucky for him, James Taranto was kind enough to remind Krugman what he–and Krugman’s wife, Robin Wells–wrote on the issue of unemployment benefits:
Public policy designed to help workers who lose their jobs can lead to structural unemployment as an unintended side effect. . . . In other countries, particularly in Europe, benefits are more generous and last longer. The drawback to this generosity is that it reduces a worker’s incentive to quickly find a new job. Generous unemployment benefits in some European countries are widely believed to be one of the main causes of “Eurosclerosis,” the persistent high unemployment that affects a number of European countries.
So . . . um . . . isn’t this precisely what Kyl said? And by denouncing him for the comment, didn’t Krugman effectively repudiate his own work–along with that of his wife–on the issue of unemployment benefits?
But this isn’t the only recent weird entry in Krugman’s oeuvre. Just a couple of days ago, Krugman ridiculed the notion that because of the economic innovations that Milton Friedman and like-minded economists urged Chile to adopt, the country because rich enough to augment its living standards, and with it, its building codes, thus preventing the recent devastating earthquake in Chile from inflicting even more damage. One of Krugman’s counters to this argument is the following:
As a number of people have pointed out, there’s this little matter of building codes. Friedman wasn’t exactly fond of such codes — see this interview in which he calls such codes a form of government spending, because they “impose costs that you might not privately want to engage in”.
Pretty damning! Except . . . well . . . the Princeton professor didn’t exactly reveal the full quote from Friedman, as this comment, and this one, and this one all point out. Too bad that Krugman has not seen fit to correct the misleading impression he gives concerning Friedman’s views on this subject.
And too bad that Krugman seeks to mislead concerning Chile’s economy. He argues that free market policies have had nothing to do with Chile’s economic success, because that success was too far removed from the time Friedmanite policies were implemented. But his commenters call him out on his evidence. This comment points out that in fact, Chile’s economic success came soon after the implementation of Friedmanite policies, and that the graph Krugman uses is utterly deceptive. And here, we are reminded that there is something very political about how Paul Krugman reads and describes a graph showing a GDP trend.
Tyler Cowen picks apart Krugman’s post as well. I may disagree with some of Cowen’s own critique of Chile’s economic performance, but at the very least, Cowen’s critique is more balanced, fair, and nuanced than is Krugman’s ham-handed attack. Concerning Krugman’s remark that Chileans hate the pension reforms that took place under the influence of Friedman and other Chicago economists, there is plenty of evidence–see this, for example–that the pension reforms delivered impressively for Chileans.
Finally, note how Krugman strives to ensure that Friedman is given no credit whatsoever for any of the good things that went on in Chile. But when it comes to things like fanning fears of food poisoning, Krugman is more than happy to blame Friedman. Never mind that countries were Friedmanite policies are not in evidence suffer from food poisoning outbreaks as well. Never mind that it is more than a little hypocritical to claim that Friedman could not possibly have had anything to do with good and palliative developments, but must have been responsible for all bad things that happened, and that are about to happen. I know that Paul Krugman hates Milton Friedman with a vengeance. And of course, it would surprise no one to find out that Krugman waited for Friedman to die before launching his jeremiads; recall that George Shultz once commented of Friedman that “everyone likes to debate Milton . . . when he leaves the room,” and one most emphatically leaves the room when one passes from this world to the next.
But still, after a while, doesn’t all of this Friedman-bashing just get a little pathetic?