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Paul Krugman’s Great Unraveling By: Jacob Laksin
FrontPageMagazine.com | Friday, October 17, 2008


It’s not unusual for the Sveriges Riksbank Prize in Economic Sciences, the economics equivalent of the Nobel Prize, to be bestowed for work done decades earlier. Joseph Stiglitz, the 2001 Nobel laureate, was honored for his research on the economics of information back in the 1970s. The mist of nostalgia hangs even more thickly around this year’s winner, New York Times columnist and economics professor Paul Krugman. Although Krugman’s work on international trade patterns and economic geography in the late 70s and early 80s is widely admired in the field, it has long since been eclipsed by his second career as a Democratic partisan, a votary of big government, and a reviler of all things Republican and conservative.

It’s hard to believe today, but Krugman’s trajectory from esteemed economist to Democratic Party animal was not a foregone conclusion. When he first began writing for a non-academic audience in the 1990s, Krugman did not flinch from picking fights with Democrats and their ideological allies. That included the Clinton administration. Having initially endorsed the Clinton administration’s economic plan, Krugman later dismissed its “dominant ideology” as “foolish,” and sneered that it preferred “policy entrepreneurs to real experts” – a thinly disguised dig at future Clinton labor secretary Robert Reich. In his own estimation, such candor cost Krugman a position as a Clinton’s chairman of the Council of Economic Advisors. But no one could accuse him of being a party loyalist.

Parallel with his political heterodoxy, Krugman also showed an admirable willingness to deal with inconvenient facts. In 1994, he came out with Peddling Prosperity, a book that, while unfriendly to conservative “supply-side” economics and its commitment to cutting taxes and regulation, nonetheless acknowledged its merits. Krugman conceded, for instance, that “conservatives” had “made a strong case that the distortions of incentives associated with taxes were larger than most economists had previously realized.” No friend of deregulation, Krugman nonetheless admitted that Democratic administrations, no less than their Republican counterparts, had made it a matter of policy – and moreover that the policy had its successes. Thus he noted that the “extensive deregulation of the oil, airline and trucking industry began under Jimmy Carter,” and that “[m]ost economists count these deregulations as a success.” Although no one could credibly read these books as briefs for conservative economic theory, they hardly foretold that the author would become a partisan cheerleader and ideological zealot.

Then came Krugman’s great unraveling. With the election of President Bush, Krugman lost any sense of broader perspective and abandoned any pretense to considered analysis. His Times columns became bitter screeds against the Bush administration’s “hard right turn,” “America's radical right right-wing media,” and the right generally. “Yes, Virginia,” Krugman insisted, in all apparent seriousness, “there is a right-wing conspiracy.”

Krugman reveled in his new role as a scourge of the right. “If I have ended up more often than not writing pieces that attack the right wing, it's because the right wing now rules— and rules badly,” he declared. But while Krugman’s rants against the right may have endeared him to the Times’ liberal readership, professional economists have been less impressed with his political ax grinding. “I think Krugman has been quite shrill in his treatment of Republicans in general and there is nothing in economic science which sides with either party a priori,” says Peter Boettke, a professor of economics at George Mason University.

That is not the impression one would get from Krugman, who has yet to find a mishap, economic or otherwise, that cannot be pinned on President Bush and Republicans. During California’s energy crisis in 2001, Krugman blasted the Bush administration for its failure to impose price caps through the Federal Energy Regulatory Commission (FERC). At no point did Krugman see it fit to mention that the Clinton administration, under the influence of its economic advisors, similarly resisted imposing price controls through the FERC. In 2004, Krugman claimed that job projections by the Bush administration’s Council of Economic Advisors demonstrated what happens when “political propaganda takes the place of professional analysis.” In fact, as economist Alex Tabarrok showed, it was Krugman who allowed politics to distort his analysis. So flagrant were Krugman’s distortions that in May 2005 former Times ombudsman Daniel Okrent was moved to vent his exasperation in a farewell column for the paper. Warning that “Paul Krugman has the disturbing habit of shaping, slicing and selectively citing numbers in a fashion that pleases his acolytes but leaves him open to substantive assaults,” Okrent urged publisher Arthur Sulzberger Jr. to “hold his columnists to higher standards.”

Krugman’s reflexively partisan response to the recent financial crisis shows how far he has strayed from such standards. While Krugman generously conceded that the crisis had causes other than the Bush administration, he nevertheless assured his readers that much of the blame should be ascribed to an “administration whose philosophy of government can be summed up as ‘private good, public bad,’ which must have made it hard to face up to the need for partial government ownership of the financial sector.” Never mind that one of the first steps taken by the ostensibly privatization-obsessed administration was to announce the largest government bailout of the private sector in American history, complete with a government takeover of mortgage giants Fanny May and Freddie Mac and a price tag of over $700 billion. For Krugman, political point scoring trumped such trivialities as facts.

Krugman’s penchant for blaming the Bush administration for the alleged horrors of deregulation is all the more curious given his previous recognition that similar policies were implemented by Democratic presidents. Today one seeks Krugman’s columns in vain for such historical nuance. Expunged is any mention of the deregulation under the Carter administration, or the Clinton administration’s partial repeal of the 1933 Glass-Steagall Act, which deregulated the banking industry. To be sure, many economists dispute that deregulation is the principal cause of the current crisis. They cite the 1977 Community Reinvestment Act, which stipulated that banks had an “affirmative obligation” to make loans to low-income borrowers of dubious creditworthiness; the role of government-sponsored enterprises like Freddie Mac and Fanny May; and the activist interventions of the Federal Reserve in financial markets as the driving forces of the financial turmoil. But whatever one’s preferred explanation, economists agree that Krugman’s determined efforts to make Republican-led deregulation the sole culprit while exonerating Democrats of any trace of responsibility makes a parody of economic exegesis. “Whenever Democrats were in charge he thinks it was a golden age,” observes William Anderson, a professor of economics at economics at Frostburg State University. “If this were an English professor saying this, I would excuse them – they can’t help it. But I can’t excuse an economist. We’re supposed to provide dispassionate analysis. What we get from Krugman is partisan shilling.”

Economists being economists, some of Krugman’s academic critics have tried to demonstrate analytically that he is guilty of the very charge he levels at the Bush administration: sacrificing facts for ideological and partisan biases. This January, economist Daniel Stein published a comprehensive critique of Krugman based on his columns from 1997 to 2006. What he found would surprise no one who has read Krugman’s columns in recent years. For instance, despite his professed admiration of the free-market, Krugman routinely favors government intervention and increased regulation. Aside from a single column opposing rent-control and agricultural subsidies, Krugman’s support for the free market was nowhere in evidence. Beyond that, Klein found that Krugman now approached economics through a “liberal versus conservative” mentality, and there was little doubt where Krugman’s allegiances lay. “He panders terribly to New York Times readers,” Stein said in an interview. “Meanwhile, he rips on people for being ideologues when it’s obvious he has his own ideological commitments.”

Political columnists are of course entitled to their ideological commitments – they would hardly be fulfilling their job descriptions otherwise. Krugman’s sin, instead, is his habit of confusing his roles as a columnist and economist and treating his political opinions as if they were expressions of empirical fact. A prime example is Krugman’s 2003 anti-Bush polemic, The Great Unraveling, in which Krugman congratulated himself for recognizing the “world class mendacity” and “outrageous dishonesty of the Bush administration.” “Why did I see what others failed to see?” Krugman asked. He supplied his own answer: “One reason is that as a trained economist I wasn’t for even a minute tempted to fall into the he-said-she-said style of reporting” that gives conservative arguments equal weight as liberal ones. If ever there was proof that Krugman had blurred the boundaries between scholar and advocate, this was it. (In an unintentional bit of bien pensant self-parody, Krugman, who is also a professor at Princeton, pointed to the fact that he continues “to live the life of a college professor” as evidence of his ideological independence.)

That Krugman is now chiefly known for his partisan commentary does not necessarily mean that his Nobel is undeserved. His defenders argue, with some justice, that the prize was given for his substantive work in economics and not his Bush-bashing political punditry. The fact remains, however, that Krugman’s image as an economist has become inseparable from his political agenda, something that pleases Krugman as much as it troubles his fellow economists. “To the extent that Krugman's prize reinforces the idea that economics is a partisan game of politics, and not an objective science, we are all robbed of perhaps the best analytical tool at our disposal to assess alternative public policy paths,” says George Mason’s Peter Boettke. In that sense, winning one of the top prizes of his profession is not exactly flattering to Krugman. For all its prestige, the Nobel is also a reminder of a time when the acclaimed economist published something more significant than liberal apologetics.


Jacob Laksin is managing editor of Front Page Magazine. His email is jlaksin -at- gmail.com


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