The Goods

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"The Goods"

McMegan points to John Henke’s compendium of quotes by Paul Krugman which is supposed to illustrate Megan’s earlier contention that “Paul Krugman has predicted eight of the last none recessions under the Bush administration.” If this is the best Henke’s got, then he really doesn’t have the goods. Henke has nine quotations. Three of them are recent enough that they seem to me to be predicting the economic slowdown that is now widely believed to be underway (see, e.g., Ben Bernanke and other Republicans who obviously aren’t grinding anti-Bush axes).

Krugman’s May 2005 prediction that we were nearing the end of a speculative bubble in the housing market, similarly, looks really good in retrospect — prices were about flat throughout 2006, and are now headed downward. Again, in April 2005 Krugman said “rising inflation in an economy still well short of full employment – has already arrived” and, indeed, it had; the inflation rate was rising and the employment-population ration remained quite a bit lower than it had been in the late 1990s. With five out of nine correct forecasts, this Krugman guy is looking pretty smart.

Similarly, Henke wants to mock the April 2004 observation that “An oil-driven recession does not look at all far-fetched” but it would be worth reading the actual column to see what Krugman’s talking about:

Could an oil shock actually lead to 1970’s-style stagflation — a combination of inflation and rising unemployment? Well, there are several comfort factors, reasons we’re less vulnerable now than a generation ago. Despite the rise of the S.U.V., the U.S. consumes only about half as much oil per dollar of real G.D.P. as it did in 1973. Also, in the 1970’s the economy was already primed for inflation: given the prevalence of cost-of-living adjustments in labor contracts and the experience of past inflation, oil price increases rapidly fed into a wage-price spiral. That’s less likely to happen today.

Still, if there is a major supply disruption, the world will have to get by with less oil, and the only way that can happen in the short run is if there is a world economic slowdown. An oil-driven recession does not look at all far-fetched.

In context, that’s a not-especially-alarmist warning that I think looks fine in retrospect. The others look a bit better for Henke. But Krugman’s track record looks pretty good, even in the context of a series of quotes cherry-picked to make him look bad. I find the endless array of complaints people pretend to have with Krugman’s work fascinating. Krugman is an effective and high-profile advocate for progressive politics. Lots of people want progressive politics to fail. Therefore, they don’t like Krugman’s columns. That’s not so hard to say! But nobody seems willing to say it. Instead, you get a lot of bizarre tut-tutting as if I were to fret that Charles Krauthammer should really write more serious psychology columns or something.

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