A few weeks ago (when I constructed the skeleton of this post), Paul Krugman bemoaned the lack of a unifying analogue to our Civil War in Europe. He apparently caught some flack (which I didn’t read), which he responded to by noting that the Franco-Prussian war only unified Germany when “the point” is unifying Europe (something Europe is “seeking”, even as it schizophrenically rejects it whenever a referendum comes up). I don’t think it makes for a good analogy. I once actually believed like Krugman that the U.S was not referred to in the singular before the Civil War but was as a result. This story appears to have little support according to linguists. The U.S of course had a unified defense budget before the Civil War and didn’t have Social Security until F.D.R or Medicare until L.B.J. Additionally, it was full of Anglo-Protestants, founders like John Jay spoke of that fortuitous homogeny (ignoring the slaves and indians). It is less surprising that such states would be unified than the various peoples of Europe who already have their own nations (and significant separatist movements within a number of those nations!). When you get down to it, isn’t it odd that the U.S is not part of a larger government structure with quite similar Canada, “the 51st state”? And that’s of course leaving aside Mexico, whose suggested integration would get a politician tarred and feathered. In a sense we are lagging behind the Europeans in integration, if we were similar there would already be the dreaded Amero and NAFTA superhighway. Not that I view political unification as a good thing, I am more radical than Scott Sumner and think the 50 (not nearly enough!) U.S states should be less unified than Europe currently is.
On a different note, in the comments to the Sephen Williamson post I linked to Williamson cited David Levine as a good example of an economist whose site does not quite qualify as a blog. I checked it out and found that Levine on his front page still had a post from 2009 responding to Paul Krugman’s criticism of the economics profession. Reading his open letter in the Huffington Post, it struck me as different from many attacks on Krugman. Usually people are exasperated that the famous Nobel-winning economist & widely read New York Times columnist is being dishonest/partisan and misleading people. Levine is unusual in that he seems to look down on Krugman, regarding him as an irrelevant old man left behind in the past. That led to a bloggingheads debate with philosopher Alex Rosenberg on falsifiability in economics and how the field has become a more precise predictive science. A number of economists have urged humility in the face of the crash and emphasized how little we understand and how complicated everything is, but Levine seems supremely confident in the state and progression of economics. But since he regards undergrad textbooks as embarrassingly bereft of the new insights of complicated dynamic models I know nothing about, I can’t evaluate his claims.
Entitled to an Opinion 
July 3, 2010 at 10:58 am
Why does Krugman take it for granted that European unification is good? There are many reasons to believe it is not. From a purely economic point of view, the way in which the collapse of Greece has come to threaten the whole European economy is a product of the EU’s common currency and central banking. Germany did not ‘bail out’ Greece as a charitable gesture – it did so because it didn’t want German banks to have to mark down or write off Greek sovereign debt, which would have destroyed bank capital and systemically impaired the whole European financial system.
The German bail-out of Greece was, in other words, analogous to the Fed’s bail-out of Fannie Mae and Freddie Mac, in the absence of which a marking-to-market of their securities would have demolished the investment portfolios of just about all U.S. commercial banks and thrifts.
National currencies and economies compartmentalize credit risk; international interdependence spreads it, weakening strong economies while doing nothing to strengthen weak ones.
July 3, 2010 at 8:10 pm
I fully expect the E.U to come unraveled – not completely, perhaps, but enough to end up with the Euro as a quaint relic. The lesson of Greece is that a country places currency control in someone else’s hands at grave risk to its own economic well-being.
Krugman’s recent post on the Iceland disaster and aftermath is especially interesting in this regard.
Do you really consider Krugman to be dishonest/partisan and misleading people? that is a heavy ethical charge. Krugman was apolitical for a long time, and (I believe) became radicalized (as I did) by the machinations of the Repugs in the late 90’s, and then the blithering incompetence and blatant dishonesty of the Cheney administration.
I looks to me like PK sincerely believes everything he writes, tries to educate people, and is genuinely exasperated by the current emphasis on deficit hawking.
BTW – how did you stumble onto my blog?
Cheers!
JzB
July 5, 2010 at 11:47 am
“Do you really consider Krugman to be dishonest/partisan and misleading people?”
There is a very short answer to that – Enron consultancy. The man is utterly mercenary, and a sanctimonious humbug to boot.
July 3, 2010 at 9:12 pm
Political unification seems to be an article of faith among the elite of Europe. I guess they see it as a reaction to WW2 and nationalism. Krugman should be given credit for predicting that the Euro would not work out well.
jazzbumpa, I was attempting to paraphrase how many critics view Krugman. I think there is good evidence of partisanship (saying contradictory things depending on who is in office), less so for dishonesty. I agree that there was a significant shift with the Bush presidency. Bush merits no defense, but it is still the case that politics is the mind-killer.
I found your blog because you comment at Modeled Behavior.
July 5, 2010 at 8:45 am
This is not the first time I’ve seen an EJW article the attacks PK, in an entirely invalid way. I’m not going to wade through 38 Pgs of Brett Barkley bullshit, but I did skim the Krugman section enough to see what he’s doing. Barkley’s unstated underlying premiss – that all deficits are created equal – is either abysmal economic ignorance, in which case the EWJ should have rejected it, if THEY were honest, or mere sophistry – so, clearly, they aren’t. I’m convinced it’s the latter. Though, who knows, BB might be as dumb as this makes him look.
Krugman was against Republican – specifically Bush II – policy because it was unsound, irresponsible, and possibly idiotic. As far as I know, no other regime in the history of the world ever simultaneously cut taxes and went to war.
It’s clear, even from Barkley’s cherry-picked quotes (and note he omits Krugman’s response – whatever it might have been – to Russert’s question) that PK recognizes when and how to have and not have deficits, and why the differences are important. One thing I often see in right wing regressives is a suggestion that policy doesn’t matter. Of course, they turn this on and off as a matter of convenience.
One of the things that inspires PK confidence in me is that his critics are always like this. They misquote, quote out of context, and use all sorts of propaganda techniques to deceive their readers.
The other things I’ve noticed about right wing regressives is a total tone-deafness to irony. Barkley’s Adam Smith quote as a header to his hatchet job is absolutely brilliant.
As I’ve said repeatedly, it’s fine to disagree with PK. In fact, it would be great to see someone actually prove him wrong. But please use real facts in their intended context, and valid logic. Meanwhile, I’m not holding my breath.
Cheers!
JzB
July 4, 2010 at 12:19 am
I think the “nice sounding” explanation is that political unification in Europe is a reaction to WW2 and nationalism.
It seems to me its more about the same type of racialism/nationalism as China and a desire to be part of units that are the same order of magnitude of power/status as the most powerful sovereign entities.
I think the racialism element is a post-colonial reaction that at the same time measures themselves against the USA and China. But my analysis is very surface. I don’t have deep historical literacy, and only special near-expert level literacy about certain elements of european unification.
I’ve bumped into lots of european technocrats and heard their thoughts about unification, and my read of the subtext of their thoughts informs this analysis.
July 4, 2010 at 9:36 pm
That also sounds plausible, a number of folks like Jeremy Rifkin have speculated in the New European Century vein.
Regarding racialism, I had been under the impression that many of the same people who favor European integration also favor more immigration of non-Europeans.
Off-topic: At Sailer’s you recently argued that Michelle Obama is a risk-taker. Could you elaborate on that?
July 5, 2010 at 1:48 pm
It really shouldn’t take much explanation. Look at her professional arc. What differentiates her from her narrow band trait cohort is the risks she has taken, as well as extremely good judgment on her part, it seems to me.
I’m partial to the theory that the decision making brain trust of team Obama is small, and she seems to me to have been one of the half dozen key decision makers from the beginning of his 5 year arc to the presidency in 2008.
July 6, 2010 at 7:39 am
Here’s a question: has India, which is really a collection of different regional cultures, benefited from having them lumped together as a single nation?
Previous experiences with the Balkans and various African and Middle Eastern countries that were composed of culturally and often religiously distinct areas squished together, often for the convenience of foreign imperial bureaucracies, suggests that they’re prone to internal friction and catastrophic failure. India may be more tolerant, so it may be easier to discern possible positive aspects of such melds.
As far as I can see, the EU hasn’t produced any benefits, and has resulted in fiscally-responsible nations pulling the dead weight of the societies that can’t get it together.
July 6, 2010 at 7:55 pm
jazzbumpa, indeed not all deficits are created equal. Some are larger than others. The particular party or president is irrelevant (to non-partisans). Bartley quotes an interview with Tim Russert in which Krugman justifies his changed tune by saying the deficits were larger as a percentage of GDP (Bartley writes that at the time he was mistaken). It is certainly the case the Krugman sensibly opposed what Bush was spending money on (a big war), but one can criticize such unproductive spending even in the absense of a deficit. It is funny you mention war though, because Krugman mentions that as such a time when big deficits are more acceptable, and so he admits that he was wrong in 2003 for that reason (I imagine Bartley would suggest that his partisanship assisted him in making that error). And Bartley most certainly did not omit Krugman’s response, he just didn’t add a line-break. There is one sentence from Russert, the rest of the block-quote is from Krugman. Finally, you claim the quotes are “cherry-picked”. Bartley claims to note every occassion found via Lexis Nexis on which his economists published commentary on the deficit within his time-frame and supplies a link to his excel file containing the quotations, if he is missing some relevant examples you should notify him. If he has omitted some particularly relevant quotes from the body of his article, I invite you to share them.
As for my own opinion of the deficit, I think the Krugman of today (the first kind of economist) is correct, even though as a cynic I may disagree on the value of what it is being spent on.
Michael, I think it’s a cheap and baseless shot to tar Krugman by association with Enron. Do you know anything about the details of his consultancy that indicates he behaved in a blameworthy manner? If not then I don’t see how he is any worse than any contractor or supplier to the company.
Hopefully Anonymous, I don’t see any great examples of risk-taking in Michelle’s career. She attended Ivy League schools (same undergrad as her older brother) to get a law degree and then joined a law firm (compare Barack, who had stints as a community organizer and employee of the SDS-linked Business International before he worked trained under her at their law firm). Afterward she worked for the city of Chicago (including as assistant to the Mayor) like her parents, then director of a non-profit encouraging kids to work in non-profits, then did some public relations type stuff for the University of Chicago. Reads like a textbook case of playing it safe. Not that I hold it against her! The story usually given by the two is that Michelle was resistant to Barack’s decision to run for President (might even have been senate), and that he gave up smoking in exchange. Could be made up, and he has admitted that he failed to quit smoking.
melendwyr, India initially had some partition massacres and wars with Pakistan, but that seems to have simmered down. There are still flareups in Kashmir and some problems with Naxalites (which might be blamed on Maoism rather than regionalism), but it doesn’t seem to be as conflict-ridden as Africa. I can’t say how I would evaluate the net effect.
July 7, 2010 at 5:21 pm
TGGP, we have very different reads on Michelle Obama’s decision-making and professional arc. Yours seems to me to be warped by desire not to feel inferior to her, although the best evidence to me is that your ability to make models of reality and to act on them is inferior to hers (mine is probably inferior to hers as well).
I think you underestimate how hard it is to consistently win high stakes games without deviantly high strategic decision making ability.
July 7, 2010 at 11:35 am
indeed not all deficits are created equal. Some are larger than others.
This is deeply disappointing. I hope you are being coy; I fear you are being obtuse; the possibility that you are being earnest is simply too depressing to contemplate.
It’s pretty clear Barley had his conclusion in hand and went in search of data points to support it. That is what cherry picking means. It is partisan hackery of the worst sort, and it is despicable. When Krugman said something different than something he said many years earlier in a different place and time he was evidently wrong in a partisan way, and when he was steadfast about something – well, that was wrongly partisan, too.
Having a big data base doesn’t validate one’s inquiry. methods, nor intent. It does, however, offer a large, fertile cherry orchard. I have no obligation to tutor Barkley on his methodology. If he doesn’t know what he is doing, then that is a black mark on his George Mason U diploma, at the very least.
Anyone so inclined could do this to Milton (we’re all Keynesians now) Friedman, John Cochran or Scott Sumner, if he has a long enough track record.
Sumner, BTW is being particularly obtuse re: Krugman and EMH. Implicit in his argument is that you must be a fervent EMH believer – either in or out of the closet – or you can’t ever use market analysis (of a market example with world-wide participants where the possibility of surprise is essentially nil) to illustrate and/or validate a point you’ve already made based on totally different reasoning.
This is presenting a false choice. It is logically invalid, and all too typical of right wing regressive thinking.
Jesus, this is tiresome.
JzB
July 7, 2010 at 7:28 pm
Hopefully Anonymous, I don’t consider “risk-taking” to be an endearing characteristic, so this is not a matter of inferiority/superiority. I admit that all I know about her comes from reading a short Wikipedia article so there might be some relevant incidents I’m unaware of. If you have any examples of risk-taking to give, provide!
jazzbumpa, I mentioned one other relevant characteristic of deficits. Paul Krugman notes that war deficits are easier to recover from, and overlooking that relevant fact caused him to go wrong. My sense of parsimony prohibits me from making a big distinction between war vs non-war, but I can grant it for the sake of argument. The end result is, as Krugman himself is quoted as acknowledging, to undercut his his criticism of those deficits. Keep in mind that I am distinguishing between the value of spending and the harms of deficits. If there are some other relevant distinguishing features of deficits, present them.
Scientists start out with a hypothesis and then search for data to back it up all the time. Rare is the regression intended to fail in rejecting the null hypothesis! Cherry-picking has a well-defined definition: to selectively choose unrepresentative examples because they support your case. If the quotations Bartley presents in the body of his piece are unrepresentative of those in his database or if his database leaves out relevant commentary, you may accuse of him cherry-picking. Otherwise you have no grounds to do so.
Bartley writes “His stance in support of a budget deficit in this instance was more a function of the economic crisis than a bias in favor of the impending Obama administration. In fact, he criticized the Obama administration during November 2009 at the first sight of compromise regarding a second stimulus:”
He’s not attacking him for being “wrongly partisan”, he’s saying that’s not an example of his opinion being determined by whose ox is gored rather than the nature of the situation. Bartley’s later framing as “one instance where Krugman held to his guns”, suggests that it is a counter-example to the picture of Krugman’s stance as being determined by partisanship rather than principle. However, Krugman himself frames his stance on the deficit in explicitly partisan terms.
Yes, people with long track-records can be more easily accused of inconsistency. Indeed, they should! Scott Sumner has done that for Anna Schwartz.
Sumner’s point about the EMH is that prognosticating as if it is accurate led to more accurate results than trying to second-guess the prices. He didn’t suggest that anyone is logically compelled to either ignore or forswear second-guessing. I didn’t quite understand your point about surprise.