Thursday, July 08, 2010

Vegas Return, and Paul Krugman

Upon my return from Vegas I read Greg Mankiw's blog regarding Paul Krugman's feelings on fiscal stimulus skeptics.  To sum, Krugman thinks they're stupid, or with more nuance, Krugman wants to persuade his readers that stimulus skeptics are stupid.

My opinion of Krugman declines weekly.  I think he started off as a brilliant economist, was immensely rewarded for his work, then decided to eschew sound economic reasoning in favor of promoting his agenda.  The easiest way to demonstrate Krugman's lack of intellectual honesty in his columns is to point out an example of great honesty.  On his blog Wednesday, Mankiw outlined Krugman's argument that fiscal stimulus skeptics are illogical.  He then points out a few ways in which skeptics may be right.  But he doesn't stop there, he goes so far as to say what particular belief Krugman holds that enables his continuing belief in stimulus.

"...he does not believe that the distortionary effects of taxes are particularly large and so they do not figure much into his policy analysis. "
Krugman also points out a correlation between low investment and a weak economy, concluding that investment is down because the economy is weak.  Here, Krugman wants you to believe that fiscal stimulus is required to bring the economy back to life and thus restore investment.  Mankiw points out that no one has yet proven the causal relationship between investment and the business cycle.  It could be that investment slows down for other factors, which leads to a weak economy.  Fiscal stimulus packages may not fix the problems that led to decreased investment to begin with.  Krugman, a Nobel Prize winning economist knows this, but he is willing to mislead his many readers in the New York Times to garner support for fiscal stimulus that many economists think have an enervating effect on future private business investment.  

Reading Mankiw's blog leaves a person informed about differing beliefs on economic phenomenon.  Reading Krugman's articles misleads and indoctrinates.

(For those of you who saw Get Him to the Greek, Krugman had a cameo.  Classic.)