patrick.net

Ah, it was so much easier to be a Keynesian before the Internet remembered everything…

From 2010 through 2013, Paul Krugman had been hitting his New York Times readers with two main points:

(1) The U.S. government was irrationally turning towards fiscal “austerity.” It was a dirty right-wing myth that President Obama was a big-spending liberal. (For example, here, here, here and here.)

(2) Because of U.S. austerity, the economic recovery was suffering and indeed a “double-dip” was very possible. (For example, here and here.)

However, by 2014, the U.S. economy was doing much better than one would have thought from Krugman’s frantic warnings, and so he had to change his story. Now, rather than exhibiting the awfulness of the “fiscal doomsday device” of the budget sequester, the strong “Obama Recovery” showed how foolish conservatives had been to warn about ObamaCare, tax hikes, and so forth.

Now in a previous Mises CA post, I pointed out the shamelessness of this move. Krugman had clearly set himself up for a non-falsifiable prediction: If the economy had tanked in 2014, then it would have proven how awful austerity was–“the lessons of 1937!”–just like Krugman had predicted; whereas if the economy improved, then it proved the Affordable Care Act was a good policy that wouldn’t destroy jobs, just like Krugman had predicted. How convenient.

But with Krugman’s latest post making the same (shameless) move, we don’t need to rely on quotations which are soooo boring. Instead we can just draw on two different charts that Krugman himself constructed, so you can’t accuse me of cherry-picking.

First, consider the following chart from a Krugman post in March 2012. Now since it was way back in 2012, Krugman at that time still thought the economy was poised for very hard times, and that’s why he was stressing how little government spending there was under Obama. To make the point, Krugman posted the following chart:

So Krugman’s point with the above chart was that, contrary to those liars on Fox News, the relevant (for Keynesian purposes) metric of government spending during the Obama recovery was actually falling, whereas it rose steadily under Reagan and George W. Bush in their recoveries. In particular, 10 quarters after the recession officially ended, Krugman’s preferred metric of government spending was up about 12% under Reagan, up about 7% under Bush, and down about 4% under Obama.

Before we move on, I’m going to update Krugman’s chart, so that we can see what the numbers are like as of today. In other words, I’m going to do exactly what Krugman did above, except instead of stopping at 10, I’m going to extend the chart out to 24 (since now there have been a full 24 quarters since the recession officially ended in 2q 2009.) If you want to check my math, here is where you get the raw data from FRED.

You can compare the two charts above and see that they match perfectly up through the 10th quarter, so you can be confident that I’m doing exactly what Krugman thought was the relevant comparison for his readers, back in March 2012. I’ve just added the new data points that have come in, since he posted it. As you can see, the discrepancy has greatly increased in the meantime. At this point, Krugman’s preferred metric of government spending is DOWN a cumulative 8% under Obama since the recovery began, whereas in the Bush years at this point it was UP almost 12% and under Reagan it was up a whopping 26%.

Now, fast forward to today. The economy did not succumb to the forces of the sequester as Krugman had warned, and hence his new rhetorical ploy is to mock all of the conservatives who had freaked out over the job-killing ACA. In a post on August 7, 2015, Krugman twists the knife by posting the following chart:

[NOTE: The job data is monthly, which is how Krugman’s x-axis is numbered. However, he erroneously called it “Quarter,” and so I added in blue the actual quarters. This allows for easier comparison with the earlier charts.]

Wow, look at that. After the 5th quarter of the respective recessions, the Obama recovery started beating out the Bush recovery. And yet, if you scroll back up, you’ll see that this is precisely when the “contractionary” fiscal drag kicked in, with Krugman’s preferred metric of government spending starting to fall rapidly under Obama, while it rose steadily under Bush.

Since Krugman is such an empirical guy, and goes wherever the evidence leads him, I’m sure he will update his economic policy views accordingly. After all, these are the very metrics that he himself chose, to show his readers the right way to judge economic policies.

Robert P. Murphy is the Senior Economist at the Institute for Energy Research, and a Senior Fellow with the Fraser Institute. He holds a PhD in economics from New York University. Murphy is the author of Choice: Cooperation, Enterprise, and Human Action (Independent Institute, 2015) as well as numerous other books and hundreds of articles.

https://mises.ca/posts/blog/krugman-unwittingly-makes-the-case-for-cutting-govt-spending/

Wow, so you are saying Obama did a great job with the economy? Much better than reagan or bush. Less spending and more growth than either of them. That is an interesting position. Not one I would have chosen, but you always have a different spin on things.

The point is that the economy grew despite the austerity that Krugman espoused. And that he lied about the outcome.

Bush sucked and Reagan was not all he was cracked up to be, but that is not the point.

indigenous says

The point is that the economy grew despite the austerity that Krugman espoused.

So mises is now depicting obama as an austrian? That'a really a novel idea.

bob2356 says

So mises is now depicting obama as an austrian? That'a really a novel idea.

And you say I have no reading comprehension ...

indigenous says

And you say I have no reading comprehension ...

Austrian and austerity are synonyms last time I looked. You posted the article about how obama austerity made krugman look bad not me. Maybe mises should decide which side of the fence they want to be on.

bob2356 says

Austrian and austerity are synonyms last time I looked

This is where you would say, what time is it? Bright and sunny all day.
.
If that is your comprehension of Austrian economics you need to look up the definition of Austrian economics.

There is a high demand for all government services, by Says' Law.

HydroCabron says

There is a high demand for all government services, by Says' Law.

If you say so, actually that would be true if the government produced anything in the first place.

indigenous says

If that is your comprehension of Austrian economics you need to look up the definition of Austrian economics.

I don't have to look up the definition of austrian economics. I've read some of mises and quite a bit of rothbard. It's fantasy. Keynsians base their believes on everyone in government doing the right thing. Austrians base their believes on everyone out of government doing the right thing. After thousands of years of concrete examples why both ideas are idiotic they both persist. Amazing.

indigenous says

If you say so, actually that would be true if the government produced anything in the first place.

You are free to forgo all government services. Start with the internet.

bob2356 says

Austrians base their believes on everyone out of government doing the right thing.

Ok

bob2356 says

After thousands of years of concrete examples why both ideas are idiotic they both persist.

Is that so, economics couldn't have existed longer that there was an economy?

The reason for the K's persistence is that it is not economics, it is propaganda to bilk the populace.

bob2356 says

Start with the internet.

Hasn't Al Gore gotten enough credit?

But I will take your advice for the moment as this is a waste of time.

According to Austrians, the following phenomena make a case for cutting government spending:

- Sunrise
- Bees
- The smell of freshly mowed grass
- The elements argon and molybdenum
- Charles Bridge in Prague
- The First Council of Nicaea in 325 AD
- The American hophornbeam tree (ostrya virginiana)
- Soave Sia il Vento, from Cosi Fan Tutte (this one is a pretty compelling case)
- Recessions
- Economic booms
- Those weird little muscle spasms some people get in their eyelids, that you would think everyone notices, but nobody else can really see
- Common rail fuel injection
- The Battle of Solferino
- The Permian/Triassic extinction
- The orbital resonance of Jupiter's moons

Paul Krugman talking about ecconomics is about as stupid as the "Super Size me" moron talking about gourmet food.

I don't live far from where Krugman lives in Princeton. I'm not sure if he still lives there anymore. I used to plow a few driveways in his neighborhood whenever there was snow. His summer landscaping service would plow his driveway so I never bothered to knock on his door for business. I would always love whenever a big storm hit. A truck would do his driveway in 2 seconds, and then two hours later, a photo on his blog would show him with a shovel as if he did his whole driveway himself.

CaptainShuddup says

as stupid as the "Super Size me" moron talking about gourmet food.

Fat shaming.

indigenous says

Is that so, economics couldn't have existed longer that there was an economy?

Economics has always existed in some form or another. You somehow don't understand that people discussed economies before mises? Economies have existed since the first stone arrowhead was traded for some meat. I know it is hard to grasp, but there were some reasonably advanced civilizations that existed before mises. Really it's true.

Examples?