Friday, June 11, 2010


Paul Krugman is very good with words. That probably accounts for the intensity of opinion about him, both for and against. But sometimes he's too good with words, and that allows him to change the subject and avoid answering important questions.

Here's Krugman from 24 May:

Did The Postwar System Fail?

I’ve been posting about the contrast between the popular perception on the right that America had slow growth until Reagan came along, and the reality that we did fine pre-Reagan, in fact better; see here, here, and here. And what I’m getting as a common response — including from liberals — is something along the lines of, “That’s all very well, but by 1980 the postwar system was clearly failing, so what would you have done instead of Reaganomics?”

Which all goes to show just how thoroughly almost everyone has been indoctrinated by the current orthodoxy.

Krugman takes the "common response," phrases it better than anyone else, and then proceeds to ignore the question.

You cannot ignore the question, Krugman. It is the most important question since Keynesianism fell into disarray. Here's PK's answer:

Here’s what I think: inflation did have to be brought down — and Paul Volcker, not Reagan, did what was necessary. But the rest — slashing taxes on the rich, breaking the unions, letting inflation erode the minimum wage — wasn’t necessary at all. We could have gone on with a more progressive tax system, a stronger labor movement, and so on.

... Radical change happened because a powerful political movement wanted it, not out of economic necessity.

Radical change happened because Reagan's people had ideas and Krugman's people didn't.

So Krugman says we needed tight money to break the upward spiral of prices. He offers nothing else. But by 1980 the postwar system was clearly failing, Paul. And you would have done nothing about it.

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