Taranto Sinks Paul Krugman’s Battleship Krugman couldn’t have walked into this one any worse if he tried.
13 thoughts on “Taranto Sinks Paul Krugman’s Battleship”
No, Taranto didn’t read Krugman’s article very carefully:
Take the question of helping the unemployed in the middle of a DEEP SLUMP. What Democrats believe is what textbook economics says: that when the economy is DEEPLY depressed, extending unemployment benefits not only helps those in need, it also reduces unemployment. That’s because the economy’s problem right now is lack of sufficiednt demand, and cash-strapped unemployed workers are likely to spend their benefits.”
Taranto is incorrectly comparing more generous and more permanent benefits in Europe with a temporary extension of less generous benefits in a very deep depression.
You may not like Krugman, but he isn’t always wrong.
Krugman was mocking the idea that anybody could believe that incentives are an issue, and contrasting it with “textbook economics.” He was, as usual, trying to put one over on his readers.
It’s hard to understand sometimes just how Krugman won the Nobel Prize for Economics.
MVH is pretending that Krugman is somehow able to interpret in a partisan column what he actually said in a textbook in order to gain the DEEPER truth of what he really meant because it is axiomatic that Democrat policies = Good & opposition to them = Evil. Or something.
PS If someone writes it in ALL CAPS it must be TRUE, no?
Krugman was mocking the idea that anybody could believe that incentives are an issue, and contrasting it with “textbook economics.”
None of what Krugman said in this particular column was inconsistent with textbook economics in this kind of deep recession. You don’t destroy incentives when no one is hiring. This is in marked contrast to the European social safety net, which is much more extensive and applies under all economic conditions. Taranto is comparing apples and oranges. He’s simply dead wrong.
For the record, I don’t read Krugman much, and when I do, it’s not for his political views. Krugman is much better, for example, here, where he critiques the state of macroeconomics in general:
George Will did the same thing to Krugman on ABC This Week’s Roundtable. Krugman accused the Republicans of lying at the healthcare summit when they said that under Obama’s proposed plan that healthcare premiums would go up. George Will then pulled out one of Krugman’s recent columns where Krugman conceded that he premiums would go up under the plan. Krugman had a long-winded explanation for the apparent inconsistency and, like MVH’s argument that extended unemployment in a deep recession doesn’t create the same disincentive as in a normal economy, was plausible. But the point remains: for Krugman, when the Republicans say it, they are lying or live in a different universe, but when Krugman says it, well, there’s an explanation.
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Here’s Krugman on “Gold Plated Plans”
Here’s Krugman on “Cadillac Plans”
This really speaks for itself.
But to spell it out: When Bush proposed to limit the tax-deductibility of generous employer-provided health-insurance plans, Krugman went on a spittle-flecking tirade. When Obama proposed to limit the tax-deductibility of generous employer-provided health insurance plans, Krugman opined professorialy about bending the cost curve — the very thing he claimed was “utterly at odds with the evidence” and outside the bounds of any “economic analysis I’m aware of” when the idea came from Bush.
One could, like MVH, be inclined to give Krugman the benefit of the doubt. But Krugman has done nothing to earn such consideration.
“This really speaks for itself.”
Er, no, it doesn’t. I read both of those articles, and yes, Krugman was talking about limiting the deductibility of generous employer health care plans both times.
His first article refuted the idea that such a tax break would have any effect on the *uninsured* being able to afford health care. The Bush quote states that the tax code “unwisely encourages workers to choose overly expensive, gold-plated plans. The result is that insurance premiums rise, and many Americans cannot afford the coverage they need.”
Krugman’s article is a response to that statement. Krugman argues that there is no support for the proposition that Peter choosing a more expensive health care plan would affect Paul’s premiums for a less expensive plan.
Krugman further states: “What’s driving all this is the theory, popular in conservative circles but utterly at odds with the evidence, that the big problem with U.S. health care is that people have too much insurance — that there would be LARGE cost savings if people were forced to pay more of their medical expenses out of pocket.”
So he is disputing that the cost savings would be so large that the uninsured would be able to afford insurance.
His second article makes a completely different point and is not inconsistent with his earlier article. First, the article addresses the effect of the tax on people who *already have* insurance plans – in other words, the Peters, not the Pauls. And yes, he says that it encourages overspending by those people and it “could help” bend the cost curve.
Obviously, he doesn’t think the effect will be large:
“First, there’s the argument that many ‘Cadillac’ plans aren’t really luxurious — they reflect genuinely high costs. That’s surely true.”
Moreover, he disputes the idea that it would actually lower premiums. At best, is simply slows their growth:
“Even with the excise tax, premiums are likely to rise over time — just more slowly than they would have otherwise. So what we’re really asking is whether slowing the growth of premiums would reduce the squeeze rising health costs would otherwise have placed on wages. Surely the answer is yes.”
None of this analysis is inconsistent with his earlier position that such a tax would be completely ineffective at helping the *uninsured* afford insurance.
So far, I haven’t been shown anything that suggests that Krugman is a flip-flopping hack. That doesn’t surprise me. He’s a professional economist, not some random liberal blogger on the web. He’s probably not going to make those kind of errors. If you are going to find fault with him, you’re going to have to do better than that.
MVH, the difference in rhetoric alone is sufficient to make my point. Despite your parsing you have two Krugmans here. One Krugman assumes bad intent and indulges in outrage. The other Krugman assumes good intent and carefully weighs his argument.
Yet Krugman’s shift here isn’t just rhetorical. His advocacy also shifts. The policy under discussion is the same in both cases. When proposed by Bush, Krugman hysterically dismisses it. When proposed by Obama, Krugman grudgingly supports it.
Your claim that Krugman is just objecting to Bush’s language ignores the fact that in the process of attacking that strawman, Krugman dismisses the entire policy idea.
Krugman is a fine economist, but his sole talent as an editorialist is directed hatred. It’s tedious stuff.
Look, there is no doubt that his rhetoric will raise the ire of conservatives. But the difference in his rhetoric is absolutely consistent with his argument. Taken together, his economic argument is as follows: an increase in the tax may have some marginal benefits for bending the cost curve for the insured, but nowhere near enough to help the uninsured.
So of course he’s going to throw cold water on the suggestion that such a tax would actually help the uninsured. IFf that policy is being offered as the solution for helping the uninsured, then of course he’s going to dismiss that whole idea.
His second article is not exactly touting the tax as a savior for the health care system. He’s saying it may make a modest cost reduction for those already with insurance. He said it’s one idea to try out of many – not exactly a ringing endorsement and he makes no claim this will help those without insurance.
Now if you are saying that he was addressing a strawman, or that he quoted Bush out-of-context, then that it is an entirely different argument.
I’m not giving the guy the benefit of the doubt, but economically speaking, he’s on fairly solid ground in both of those articles.
No, he is not. And really a child could tell the difference. He is doing backflips to justify his political position. End of the day Nobel boy sounds a lot like his doppelganger, Spicoli.
Re the prize, PK did some excellent research in a very specific area. His columns show that his knowledge base does not extend.
You can believe what you want, I have no reason to defend Krugman, but I’m telling you, those two articles do not backflip on economics.
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