Along the Tracks

Friday, November 07, 2003


I never expected to find myself defending Paul Krugman of the NYT in any way shape or form ... but, it seems like the guy could use a friend. Here I go with my best effort.

Good scientists are not “optimists” or “pessimists,” they are “skeptics.” They doubt, they don’t believe until proven. They hypothesize and test and calculate and study. They do not assume anything until it has a solid foundation of proofs.

Economics is a science - or at least it attempts to be. However, economics is something which directly effects everyone, and is therefore soaked with emotions. A skeptical economist - questioning, searching for alternative answers, testing, calculating - may be working toward an objective theory or model, but to observers swimming in the economic sea being studied, he is doubting their future well-being. He is being “pessimistic.”

Note, this does not defend Krugman’s writing style - or Larry Kudlow’s, for that matter. Economic outlooks are wrapped in real-world politics, and if you are, for example, writing for a national audience, the political arguments will be far more valuable to your success than specific economic theories. Using the Kudlow example once again, his political point of view (pro-growth conservative) led him to uncritically praise the Bush program and affirm “positive” predictions about the economy which were wonderfully cheerful to Bush supporters - and disappointingly inaccurate.

In contrast, Krugman has been consistently “negative” on the economy for the entire Bush term. He has buttressed his position with skeptical inspections of economic data and the president’s economic agenda. Up until the past quarter, he has been disappointingly accurate.

Now, we can differ on the politics behind Krugman’s point of view, and again, I’m certainly not defending his writing style (or any of his unethical “Dowdified” quotes and other non-economic histrionics), but when it comes to good economic analysis, would you rather have the “optimistic” boosterism that is wrong 90 percent of the time or skeptical, if politically painful, analysis that comes across as “pessimistic” but is correct 90 percent of the time?

Which is better for planning your own family’s economic future? Which is better for determining what needs to be done nationally?

Again, I don’t agree with many of Krugman’s conclusions, but find his analysis far more valuable than most of the cheerleaders I read on the right.

UPDATE: Prompted by a comment on the above-linked post from Brad DeLong, Tom Maguire also says “Fair’s Fair!” and offers people the opportunity to send in the best correct prediction by Krugman.

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