Raghu Rajan v. Paul Krugman

by Pejman Yousefzadeh on September 19, 2010


Rajan wins, methinks. Read the whole thing, but the last paragraph is worth noting, as it is so descriptive of Krugman’s modus operandi in dealing with people with whom he disagrees:

. . . Perhaps Krugman believes that by labeling other economists as politically extreme, he can undercut their credibility. In criticizing my argument that politicians pushed easy housing credit in the years leading up to the crisis, he writes,  “Although Rajan is careful not to name names and attributes the blame to generic “politicians,” it is clear that Democrats are largely to blame in his worldview.” Yet if he read the book carefully, he would have seen that I do name names, arguing both President Clinton with his “Affordable Housing Mandate” (seeFault Lines, page 35) as well as President Bush with his attempt to foster an “Ownership Society” (see Fault Lines, page 37) pushed very hard to expand housing credit to the less-well-off. Indeed, I do not fault the intent of that policy, only the unintended consequences of its execution. My criticism is bipartisan throughout the book, including on the fiscal policies followed by successive administrations. Errors of this kind by an economist of Krugman’s stature are disappointing.

Readers will doubtless be interested in this Rajan post.

UPDATE: It is entirely justifiable to kick Krugman when he is down.

  • http://pulse.yahoo.com/_3D4U7JOIMVHOZH4HBEEP4AOBTU Joe Friday

    Krugman wins because the facts are on his side.

  • Pejman_Yousefzadeh

    What an amazingly substantive comment! You overwhelm with facts and figures. My goodness, I haven't encountered any comment this utterly wonkish in my life.

  • http://www.facebook.com/bacchusmann Kevin Moeller

    Fanny Mae and Freddy Mac did not start the slide in housing! They made zero loans to the subprime market, none. It was illegal for them to do so. Wall Street and the bankers made the stupid subprime loans that bordered on criminal and packaged them up and sold them to everyone they could. It was the packaged subprime loans that triggered a broader collapse in the economy and reduced the value of the loans that Fanny Freddy owned. The financial and banking sectors caused their collapse, not the other way around.

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