Paul Krugman is at it again. This time, he’s using his position as the leading progressive columnist in the “nation’s newspaper of record,” to ballyhoo a letter from four former heads of the Council of Economic Advisors.
Their letter criticizes an economic analysis of Bernie Sanders’ policies performed by University of Massachusetts economist, Gerald Friedman, which found that Sander’s platform would increase growth by 5.3%.
Krugman’s column this past Friday suggests that the former CEA chiefs’ letter puts Bernie in the same camp as the Republicans, who’ve been spouting voodoo economics such as trickle-down and the elixir of tax cuts for decades now, complete with magic asterisks designed to make nearly $6 trillion in deficits disappear.
There’s so much that is wrong with Krugman’s column and with the letter from former CEA chiefs Alan Krueger, Austan Goolbee, Christina Romer, and Laura D'Andrea Tyson that it’s hard to know where to begin.
Let’s Start With the Letter Criticizing Freidman’s Analysis.
The best evaluation of the …er … “economic analysis” done by Krueger et. al. on Friedman’s paper comes from James K. Galbraith, former head of Congress’s Joint Economic Committee who wrote a letter to the 4 former CEA chiefs.
To quote Professor Galbraith:
You write that you have applied rigor to your analyses of economic proposals by Democrats and Republicans. On reading this sentence I looked to the bottom of the page, to find a reference or link to your rigorous review of Professor Friedman's study. I found nothing there.
Nothing there. That about sums up the “analysis.” Basically, Krueger, Goolbee, Romer, and Tyson – all appointed by either Clinton or Obama – wrote a hit piece and attempted to substitute pedigree for substance. They used pejoratives such as “grandiose,” “extreme claims,” and they go on to say, “no credible research backs up economic impacts of this magnitude.” Professor Galbraith points out that these criticisms are not substantiated and – more importantly – not true. Professor Friedman’s paper, it turns out, uses conventional economic multipliers and assumptions.
Finally, professor Galbraith dismisses the implication that Friedman’s paper is politically motivated because it provides a favorable economic review of Sanders’ platform, by pointing out that Friedman supports Hillary Clinton.
By the time Galbraith is through with this so-called critique of Friedman’s work, the real partisans are revealed to be Krueger et. al., who, without rigor or analysis, cavalierly dismissed the careful work of another economist.
Which Brings us to Voodoo Journalism
I have admired Krugman for some time, now. His columns critiquing conservative economics are factual and effective, and his article on the Great Recession, How Did Economists Get It So Wrong, was an honest and trenchant critique of the discipline and it remains one of the best explanations of how some of the fundamental failings of economic theory made economists blind to the possibility – if not the inevitability – of the Recession.
But he’s had a series of hit pieces on Sanders over the last few weeks that are poorly reasoned, poorly researched, and clearly partisan. The first, How Change Happens, was widely criticized, and rightly so. When you find yourself arguing with the likes of Ghandi, Martin Luther King, and both Roosevelts about how change happens, it ought to give you pause, even if you’ve won Nobel Prize or two.
His latest column on Friday, however, Varieties of Voodoo, embracing and ballyhooing Krueger et. al’s shallow hit piece, jumped the shark, and it risks destroying the most valuable thing a columnist has – credibility.
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It’s a deeply flawed use, of a deeply flawed paper, in pursuit of a partisan position. Here’s a few of Krugman’s most egregious errors:
It presents this non-analytical letter as a rigorous analysis, when it is little more than an opinion piece, and a baseless one at that. To quote Galbraith again:
It is not fair or honest to claim that Professor Friedman's methods are extreme. On the contrary, with respect to forecasting method, they are largely mainstream. Nor is it fair or honest to imply that you have given Professor Friedman's paper a rigorous review. You have not.
Ironically, Krugman uses a set of non-quantitative, non-rigorous ruminations to dismiss Friedman’s paper as lacking rigor.
Conflating Freidman’s Paper with Sanders’ Campaign is just plain deceptive. Sanders did not commission or endorse Friedman’s study. Implying that Sanders has done so, is the journalistic equivalent of a magic asterisk – it ignores the real source of the economic claims and suggests they are Sanders’ claims.
Krugman goes on to say, “… Beyond that, this controversy is an indication of a campaign, and perhaps a candidate, not ready for prime time.”
Wait. Talk about fuzzy logic. Sanders isn’t ready for prime time because someone else’s economic analysis of his platform (which is not an economic, but an ethical document – more about that in a minute) may exaggerate the benefits? Really, Dr, Krugman?
Sanders simply can’t be held responsible for someone else’s analysis. Sorry, but pretending that Friedman’s analysis – conducted on his own, with no connection to Sanders – somehow “indicates” that Sanders isn’t ready for prime-time is ludicrous. It’s either deliberately disingenuous or deluded. And Krugman has made a career on not being deluded.
Finally, Sanders platform is NOT an economic document; it’s an ethical position. Sanders is not, and never has, pretended that his platform is primarily or even incidentally, an economic platform. It is a moral and ethical one. It is intended to assure a more equitable and just allocation of wealth and income; to get money out of politics; to restore sensible regulation of the financial sector; to increase access to health care and education; and to generally move us from an Oligarchy back to a democracy.
So criticizing an ethical platform on the basis of a poorly constructed economic criticism of someone else’s entirely mainstream economic analysis has no relevance to Sanders qualifications as a candidate. None. Nada. Zip. It’s beyond disingenuous to suggest it does.
The fact that Sanders’ ethical platform does, in fact, result in economic gains shouldn’t be surprising. Empirical evidence shows that the 3 times we’ve adopted a laisez-fair approach to regulating the economy, it has resulted in extreme income inequality leading inevitably to the 3 biggest economic disruptions in US history: the Depression in 1890’s, the Great Depression in 1930’s, and the Great Recession in 2008. This shouldn’t be particularly surprising. When most of the consumers in a consumer economy don’t have much in the way of expendable income, there isn’t enough demand to sustain growth. And the Paris Hilton’s of the world can only buy so many yachts.
Conversely, when policies similar to what Sanders is advocating were in effect after the New Deal was passed, we had the single most sustained and equitably shared period of prosperity in US history. Again, no rocket science here. The middle class and poor spend more of their money than the rich, so there’s more demand when they have relatively more money. And Sanders’ policies put money in the hands of those who would spend it.
- If Sanders were pushing his policies as an economic agenda; and
- if Sanders had commissioned Dr. Freidman’s analysis; and
- if Krueger et. al. had done a rigorous analysis of Friedman’s study; and
- if the study had been lacking in rigor or making extreme claims out of whack with history …
then, and only then would Krugman have been justified in comparing Sanders’ platform to Republican voodoo economics. But none of those conditions pertain. Not one.
Finally, what about Dr. Friedman’s findings? Here, it’s worth quoting Dr. Galbraith’s rebuttal:
What the Friedman paper shows, is that under conventional assumptions, the projected impact of Senator Sanders' proposals stems from their scale and ambition. When you dare to do big things, big results should be expected. The Sanders program is big, and when you run it through a standard model, you get a big result. That, by the way, is the lesson of the Reagan era – like it ornot. It is a lesson that, among today's political leaders, only Senator Sanders has learned.
Dr. Krugman is batting zero on his partisan attacks on Sanders. The sad part about this is that he is squandering his credibility, and until lately, he has been one of the most insightful and courageous critiques of Republican economic policy. It would be a shame if his voice were neutered by his vacuous cheerleading for Hillary.