Here’s a letter that I sent back in June to the New York Times:
Paul Krugman asserts that the housing-market meltdown was caused by Reagan-era deregulation. This policy change, Krugman argues, encouraged injudicious lending to people who should never have gotten mortgages (“Reagan Did It,” June 1).
Mr. Krugman is careless in doing history. Among the facts that he overlooks are the many steps, both before and after Reagan, taken by the White House and Congress to push mortgage lenders to extend home loans to low-income Americans. As recently as 2003, for example, Rep. Barney Frank – hardly a free-marketeer – opposed efforts to pressure Fannie Mae and Freddie Mac to stop buoying the market for subprime mortgages. Mr. Frank declared that critics of Fannie and Freddie “exaggerate a threat of safety and soundness” and “conjure up the possibility of serious financial losses to the Treasury, which I do not see…. The more pressure there is there, then the less I think we see in terms of affordable housing.”*
Sincerely,
Donald J. Boudreaux* See this YouTube video (The Frank quotation starts near the 1:38 mark.)
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So… you don’t seem to be refuting Krugman’s history, just providing a specific example of what Krugman meant when he said:
“All this, we were assured, was a good thing: sure, Americans were piling up debt, and they weren’t putting aside any of their income, but their finances looked fine once you took into account the rising values of their houses and their stock portfolios. Oops.”
Krugman is saying that the Garn-St. Germain Depository Institutions Act changed the New Deal regulatory framework by letting lenders share in the upside risk, but not in the downside risk. Isn’t that the point that you and Russ have been making all along????
I think you get so frustrated with Krugman you don’t realize you’re making the same fundamental point. Granted, you disagree on what to do next. Krugman would say “make sure you socialize the upside and downside risk commensurately”, whereas you would say “don’t socialize any of the risk”. But THAT disagreement is besides the point of Ronald Reagan or Barney Frank.
Whatever the merits of the particular piece of legislation, any real historian – and I’ve known many in my life – would find Krugman’s “just so” story laughable. This doesn’t even begin to pass the smell test.There are no “key points” in history; history is evolutionary.
Re: “There are no “key points” in history; history is evolutionary.”I find it interesting that you juxtapose those two statements (“there are key points” and “history is evolutionary”), rather than understanding them to be compatible with each other.
Actually, they are completely incompatible. History is way, way too damn complex, and far too dynamic to start making calls about “key points.” What was the “key point” that lead to WWI? The debacle regarding Morocco? Britain’s nudge to France’s side? The British treaty with Japan? The German monarchy’s feelings of inferiority leading to the quest for overseas territories? Anyone with a brain realizes that “key points” determinations are fruitless. It is one of the first damn things you learn even as an undergrad when you are doing primary research. It is 19th century historical methodology.And really, do you think that a run of the mill op-ed writer would be able to determine what a key point is? There is a reason why any intelligent person ignores all non-specialist op-ed writers.
I’m not sure we’re talking about the same thing. To me “key” just means “incredibly important to future developments”. That doesn’t preclude an emergent, evolutionary understanding of history. “Key point” doesn’t mean “only cause”.And as for historians, they ultimately have to be parsimonious when they recount the experiences of billions of humans spread across the entire planet. It’s their JOB to understand “key points” but explain them in a way that both emphasizes their importance and acknowledges the broad spectrum of forces that converge to make history.RE: “And really, do you think that a run of the mill op-ed writer would be able to determine what a key point is?”Of the many things that Krugman is, he’s not “run of the mill”. He can comment intelligently on economics and the Reagan administration. He WORKED FOR the Reagan administration, after all!!! He probably knows a thing or two about their economic policy making.
“And really, do you think that a run of the mill op-ed writer would be able to determine what a key point is?”
He wrote a book predicting this disaster. Likewise it’s curious most people who are on record predicting this mess come not from the Libertarian persuasion but more from the likes of Krugman, (Dean Baker, Noriel Rubini). So yes he’s proved by his predictions that he could identify key historical factors leading to this outcome.
It’s all very predictable. Policies that are too deregulatory lead to wage stagnation, wealth accumulation and Boom an bust inefficient economic cycles.
Such policies changes are sore thumbs that can be readily identified by any reasonably intelligent person with no ideological blinders.
Krugman doesn’t care about portraying history accurately, he’s just out to push a partisan agenda….revisionism is his game
Oh, and one of the rules of thumb that I learned in graduate school is that 99% you hear some non-historian talk about “key events” or “points” you should ignore them.
Neither is Krugman.
True, but he didn’t tell you to ignore others with contrary opinions, as Mommsen1625 does above. Besides, he worked in the Reagan administration. He’s got pretty good credibility talking about it. And, partisan that he is, he often goes overboard too. So one should challenge him on that and provide a counterargument. Don’t just declare “you should ignore them” as mommsen1625 does.
I’ll take a specialist historian over a non-specialist like Krugman any day of the week.
Here’s my suggestion. Do some primary research in an archive some time and come back to me about your ideas concerning “key points.”
Krugman. An American Economist or a Soviet-trained revisionist of history. You decide.
Side note to Don:You can link a YouTube video to start at whatever time you want. Just add #t=1m38s to the url for the video to start playing at 1 min 38 sec.For example…
Another comments section taken over by “back and forths” with danielkuehn…
I agree – I’m all for Don deleting everything between my first comment and Methinks’s comment. None of it addresses the substance of Krugman or Don’s points.
I directly addressed the substance of the article.
Please mommsen1625. Let’s at least do MWG the respect of coming clean on what our back and forth was about (after all – everyone can read it for themselves). The only thing we addressed was Krugman’s credentials, not his argument.
I discussed more than his credentials, IMHO.
Occasionally the first response to a DK post is interesting, but all subsequent replies consist of repeatedly trying to beat some simple idea into his head.
The feeling’s mutual.
Why is that Barney Frank talking down to the rest of his from his high podium rather than a jail cell.
And, by the way, I just had the sublime pleasure of scrolling right on down through Lord Kuehns.
This is a great question. This post is more than the two words I wanted to post: “good question” because any one or two word posts are sent directly into the spam filter.
I found the original bill that was intrduced as H.R. 2803: Housing Finance Regulatory Restructuring Act of 2003.
Rep. Edward Royce (R-CA) was the only sponsor, there were no co-sponsors and the damn bill never made it out of committee which means it never even made it to the house to be voted on. Both Democrats and Republicans are at fault for this mess because of major lobbying that was done by Fannie and Freddie, we’re talking $200 million in lobbying.
From;
http://kevincolby.com/2008/11/30/housing-finance-regulatory-restructuring-act-of-2003/
Fannie, Freddie spent $200M to buy political influence
http://kevincolby.com/2008/07/17/fannie-freddie-spent-200m-to-buy-political-influence/
Basically people who believe corporations are people too are to blame. Those who believe money is the same thing as speech and those who believe lobbyist writing bills and giving politicians unlimited contributions supports their libertarian point of view are the ones to blame. They basically are the defenders of economic and political terrorism. Things will only get worse until something is done.
Goldman Sachs just took $25 billion in bonuses and the libertarians seem to believe this must have been earned income from doing productive business… unreal!
Because yes, all those laws in Europe which limit spending on elections, etc. kept them from having any problems.In a free society corporations are always going to find ways to capture regulatory agencies, etc., so the best way to combat that is to reduce the size of government.
The irony of this is of course that Fannie and Freddie were government created entities with their own very lucrative implicit guarantee from the government regarding their solvency. So lucrative in fact that it gave them a near monopoly in their area of business.
Oh, and this ought to be obvious; so called campaign finance reform is incumbency enhancement and protection.
“In a free society corporations are always going to find ways to capture regulatory agencies, etc., so the best way to combat that is to reduce the size of government.”
In a free society there wouldn’t even be corporations as they are creations of government.
Corporations are the creations of individuals; the state is involved in their creation obviously, but we tend to forget that they are voluntary entities where people work out their economic destiny.
As for ending corporations, that’s about the dumbest idea ever. Consider how much burden that would put on the large number of small, incorporated entities in the U.S. alone.
You’ll soon find yourself realizing that debating Muir is impossible…good luck to you until you come to that realization though.
Yeah, I don’t want to get rid of corporations. I’m just suggesting we set the rules for them to follow and not the other way around.
I disagree with muirgeo on whether corporations are good or bad, but he’s right when he says that they aren’t a product of the free market – they are a product of the state.
If a group of people want to get together and voluntarily create a business entity, they can – but that is just a partnership. They only have to freely contract with each other on how to share the profits and losses. A corporation, on the other hand, requires a “social contract” you might say, because the owners only have limited liability for the company. This is a very unique understanding of property that can only be created by an intervening state. Think about some other property you own – your car for example. If you kill someone with your car you can’t argue in court that you contracted with the car dealer to grant legal personhood to your car and that your liability for it’s actions is limited. Your ownership of the car obligates you to enjoy the benefits and pay the costs associated with that property. Not so with corporations. My car example is apt because there actually is such a thing as “corporate manslaughter”. This corporate form of property cannot exist with voluntary contractual relationships between person A and person B because it requires person C to accept contractual terms he didn’t agree to, and it eliminates person C’s ability to hold A or B accountable for certain wrongs done against C.
Corporations are not a product of the free market. It’s true they can’t exist without freely contracting individuals, but they also can’t exist without an intervening state. This is unlike other sorts of business partnerships, which existed long before the state intervened in this way. Keynes held corporations up as a primary example of what he meant by his infamous phrase “the socialization of investment” (which everybody assumes means a socialist state, despite the fact that he never endorses such a thing).
I disagree with muirgeo about whether corporations are bad, but my understanding is he’s right on the facts – corporations are a product of state interventionism, not an unfettered market.
you’re stupid.
“Among the facts that he overlooks are the many steps, both before and after Reagan, taken by the White House and Congress to push mortgage lenders to extend…”
Feel free to reference some of the more significant steps.
Go to page 14 for a reference, read the whole paper if you dare:
http://www.mercatus.org/uploadedFiles/Mercatus/Publications/NotWhatTheyHadInMind(1).pdf
Don Boudreaux is incorrect. Paul Krugman’s history was not careless. Paul Krugman simply lied to make a story fit into his political agenda. He’s been doing so for years once he gave up being an economist and took up being a shill for the political left.
Forget the argument about whether Reagan is to blame. President Clinton and Barney Frank pushed to raise the home ownership numbers, from what they deemed to be a stagnated number, namely 60%. And wouldn’t it be nice if any increase was disproportionately beneficial to the minority community. This would have a 2 fold effect, namely it would allow minorities, principally Blacks in this country to enjoy some of the fruits of capitalism. Understanding as we do that capital is the bed rock for wealth building and home ownership the most expedient path to capital. Not a bad philosophy, but they forgot to do their due diligence.
What’s most reprehensible about this push was the interpretation of the need for it in the first place.
The home ownership rate was “steady”. The ratio of mortgages to rent was “steady”. Any objective economist would look at the situation and say that (granted without actually seeing supply or demand) it looks like the market has reached an equilibrium point. But no, they don’t see it that way. They interpret “steady” as “stagnant”, as you say.
Your citation of culprits is still problematic I think. Krugman is right on who made the push for low income home ownership possible. Clinton, Frank, and Bush followed. There’s no point in pointing fingers just at Clinton and Frank – that’s fairly transparent. Maybe you’re not defending Republicans but you’re certainly targeting Democrats. Krugman sets the stage fine, and Don fills in the later details.
I am not targeting, as you say, Clinton pushed for changes in the Community Reinvestment Act to eliminate what he saw as redlining. One man’s redlining is another man’s prudent banking, The consequences of this rejiggering are obvious today.
Well – targeting in the sense of pointing out how Clinton did this but not Bush, who is a lot better known for pushing what he called “the ownership society”. But as I said, I don’t think you’re defending Bush or anything like that. My point is simply that we can’t be selective in applying blame or we’re never going to fully address these problems.
Given that the entire federal government (and this really isn’t an understatement – there is hardly a government agency that this doesn’t touch) was involved in making housing our very own industrial policy, our own version of what the MITI used to do – and that this continues to be the case – being “selective” is virtually impossible.
You wanna talk history? Lets talk history.
Here’s Krugman August 8, 2005
http://www.nytimes.com/2005/08/08/opinion/08krugman.html
“So the news that the U.S. housing bubble is over won’t come in the form of plunging prices; it will come in the form of falling sales and rising inventory, as sellers try to get prices that buyers are no longer willing to pay. And the process may already have started.
Of course, some people still deny that there’s a housing bubble. Let me explain how we know that they’re wrong.”
Here’s Russ; MAY 17, 2007
http://cafehayek.com/2007/05/preying_on_the_.html
“So yes, indebtedness is up in America. Most of that debt is housing. So people have more debt but they also have more assets—median net worth over that time period has gone up for every group except the second lowest quintile. So people are borrowing more but their assets are generally worth more.
But check out the last column. Except for the highest decile, the ratio of debt payments to income is between 18.1% and 20.6%. The poor don’t stand out. They’re like everyone else. They have access to credit. Why is this a bad thing?”
Here’s Don; NOVEMBER 28, 2006
http://cafehayek.com/2006/11/home_run.html
“That is, even
disregarding all the improvements that houses today have over houses in 1981, the reduction in mortgage interest rates combines with the substantial increase in the size of the typical home to permit Americans today to pay just barely more than half of what they were paying a mere quarter-century ago for their household living space.”
At what point do you guys show some remorse? Some humility? Oh of course University Professors are in no way responsible for anything much less this economic catastrophe. But legions of like minded Chicago style Friedmanites push their philosophy and yours in the universities, in the “think tanks”, in the media and through as public policy. You push for tax cuts, deregulation, a hold on unions, a hold on minimum wage, cuts to the safety nets… you push for policies that create monopolies, favor multinational corporations over small business, you push for free trade, you ignore wage stagnation and income hoarding. You get all these things and the economy tanks. Millions of people are suffering, you seem not to care. It’s apparently all their own fault. But you’re still looking for some one else to blame. It must be Acorn, or minority leader Barney Frank, or Fannie or Freddie (not even government organizations) or the CRA. Anything to cover your tracks and to change the subject. You deny scientific consensus, disregard externalities and you re-write history and look for different data or different ways to interpret the data that will give you cover and prop your house of cards a little longer.
History??? It’s all over the blog and your past writings clearly show you on the wrong side of it. Your present writings show nothing more then how hard it is for men to accept when they may have been wrong and to grave degrees.
Some of us when we make mistakes in our work see the horrible results in a dead child lying there before us. My colleges are stressed to the limits trying to take care of ill patients…. trying to do more with less ultimately because of a failed political and economic philosophy who’s results have come home to roost. Others have actions that are sufficiently removed from the end results of their work such that they can mostly sleep good at night.
I’m guessing you’ve never seen this?
http://blog.mises.org/archives/010153.asp
You’ve got a major hole in your story:
http://research.stlouisfed.org/fred2/graph/?s1id=FEDFUNDS
Krugman’s last interview that you cite was in December 2001. Interest rates hadn’t even reached their lowest point by then and we were just getting out of the recession (I don’t even know if NBER made the call yet). Interest rates proceeded to stay LOWER than they were at your last Krugman citation for 2002, 2003, 2004, and part of 2005 when they started increasing again. You’re so quick to blame Krugman that you don’t even realize that his advocacy of low interest rates came in a couple months of 2001 in the middle of a recession. You can’t blame him for low interest rates in the subsequent three years!!!!
In 2001 those low interest rates were not inflationary – they were called for by the Taylor Rule. It was only starting in 2002 that interest rates began to consistently undershoot sound monetary policy (http://johnbtaylorsblog.blogspot.com/2009/10/to-prevent-bubbles-dont-create-them.html).
Sorry, Name – Krugman’s comments in 2001 were perfectly appropriate. Greenspan’s actions in 2002, 2003, and 2004 weren’t. Was Krugman cheerleading for him then? I don’t know. But the fact that these 2001 quotes are what mises.org pulls up is probably telling.
Excellent leg work muirgeo! I think the quote from Don is a little unfair, though. Don just seems to be describing the situation, not making a value judgement of it. The other two, though, are very interesting!
I don’t think muirgeo’s reference to Don’s quote is unfair. Rather, it’s irrelevant to the topic being discussed. Lower interest rates and larger home sizes had nothing to do with the relaxing of lending standards and the wholesale purchase of subprime loans. I do not see how including this irrelevant quote can be considered “excellent legwork”.
I would say it’s relevant to the housing bubble – although you’re right, it’s not relevant to lending standards and subprimes, which you bring up (I wasn’t under the impression those were the only two things we were discussing here). But the point is, Don isn’t saying it’s a good thing or a bad thing – he’s just providing the lay of the land. He shouldn’t be blamed for that.
He dug up some old posts to give us some context. I’m going to give him credit for that – sorry if that bothers you.
daniel kuehn: “I would say it’s relevant to the housing bubble”
You are correct. Greenspan’s extremely low interest rates of 2002-2005 did contribute to the severity of the housing bubble and bust.
I got the sense that Don’s 2006 post was referring to a much longer decline in interest rates. After all, he was comparing 1981 and 2006, referring to changes over a quarter century. It was not the long term decline in interest rates but rather the sudden recent decline which contributed to the housing bubble. That’s why I felt – and still feel – that Don’s 2006 post is not relevant to criticism of the housing market meltdown.
Incidentally, Daniel, what would be excellent legwork would be if you found Russ’s post from earlier this year where he did express remorse – where he admitted he was unaware of the extent to which financial institutions had suspended due diligence practices. I would do so right now, but I’ve just got too many job responsibilities this morning.
I remember that one.
You may misunderstand me – I’m not trying to criticize Russ. My point is lots of people had an inkling we were in a bubble, almost no one realized the full extent of our problems, and playing this blame game is silly. Since Krugman is the one criticized here and Russ defended, muirgeo picked up some good posts. On a liberal blog, the appropriate selection would probably be different. Starting work too – probably be back during my lunch hour. Have a good day.
daniel kuehn: “You may misunderstand me – I’m not trying to criticize Russ.”
I realize that. But the person seeking out Russ’s earlier comment while ignoring Russ’s admission of error was criticizing Russ. You encourage him to continue providing half-truths when you praise his selective legwork.
Krugman’s “history” is only sloppy if you believe that he’s not simply a revisionist with an ideological agenda.
Maybe one day the NYT will mention that a mere elected Republican with knowledge of Austrian Business Cycle theory warned of this crisis with remarkable prescience:
Ron Paul in 2003 to the House Financial Services Committee:
Despite the long-term damage to the economy inflicted by the government’s interference in the housing market, the government’s policy of diverting capital to other uses creates a short-term boom in housing. Like all artificially-created bubbles, the boom in housing prices cannot last forever. When housing prices fall, homeowners will experience difficulty as their equity is wiped out. Furthermore, the holders of the mortgage debt will also have a loss. These losses will be greater than they would have otherwise been had government policy not actively encouraged over-investment in housing.
Perhaps the Federal Reserve can stave off the day of reckoning by purchasing GSE debt and pumping liquidity into the housing market, but this cannot hold off the inevitable drop in the housing market forever. In fact, postponing the necessary, but painful market corrections will only deepen the inevitable fall. The more people invested in the market, the greater the effects across the economy when the bubble bursts.
http://www.house.gov/paul/congrec/congrec2003/cr091003.htm
I’m hoping that now a lot of economists are rejecting the formalism that has been the standard for so long, ABCT will make a comeback. It is sorely needed right now more than ever.
Paul being right doesn’t make Krugman wrong. I’d still argue Krugmans closer to the truth. Fed policy was hugely important but so were policies that depressed wages.
what about policies that depress your head?
I haven’t been reading much of this, not when most of it is from Lord Keuhns, our lord of pomposity, but there seems to be a false correlation between economics and economic forecasting.
Economics proper is not a predictive but explanatory science. It tells us that quantity demanded goes down as price goes up, ceteris paribus, but not that it will necessarily do so, for ceteris is not always paribus, all other things are not always the same.
If economists could really predict the future, and with mathematical precision, wouldn’t they all be stock market millionaires? And wouldn’t the best of them, Paul Krugman, presumably, be rich enough to bail out the US economy all by himself?
I don’t see that happening. He seems to be like the rest of us, better able to talk about it than to do anything about it.
If, in fact, he predicted the future better than others, that would sure be to his credit, and add to his luster as an economist, but still not exempt his economics from rational analysis, which is the specific and only valid method of economics.
As Russ likes to say, most of modern Econ is Ex Post storytelling.
Exactly!
Paul Krugman Admits on the Joey Panto Show the Real Reason he Likes Inflation – It will bring about an Egalitarian Utopia
http://02e56fa.netsolhost.com/blog1/index.php/2009/10/14/paul-krugman-admits-the-real-reason-he-l
That’s why Keynes liked it too…imagine that.
http://www.youtube.com/watch?v=VqU-AZh-wqU#t=4m04s
You sure?
And this one is an actual video of Hayek on Keynes, not some goofy recording on a blog.
Ditto for ex HUD chief Andrew Coumo, who now as NY Attorney General is trying to ride a populist wave to denounce and prosecute the very same institutions he threatened to sue if they didn’t lend to people that they didn’t think credit worthy. A first class hypocrite just like Krugman and Frank. Krugman called for easy credit from the Fed and denounced Pres. Bush’s Deficit but now he loves Pres. Obama tremendously bigger deficit.
Great, great post, Bob.
Haven’t read Galbraith Jr. – read some of his father. I think the only people who predicted the extent of the problem where the people who have been prophesying disaster since 1913. But as we all know, a broken clock is right twice a day.
Even Krugman, who I agree has a particularly strong grasp of the way the economy works, didn’t see the full scope of what was coming. As John Taylor said recently on his blog, bubbles are hard to identify – we can’t hope to do so effectively until it’s too late. So instead of trying to identify them we should prevent them from happening in the first place:
If we think it’s socially preferable for government to cover some downside risk, make sure it takes a commensurate amount of the upside risk. If we think it’s socially preferable to have a central bank set interest rates, make sure they follow some sort of Taylor Rule or nominal GDP targeting rule. If we think it’s socially preferable to operate the world’s reserve currency, then we should take the Triffen dilemma seriously and not just ignore huge global imbalances, which I think are utlimately the root of this crisis. And maybe in retrospect we should talk about the prospect of a global reserve currency that isn’t subject to these Triffen dilemmas. A lot of people want to make this a great morality play between the market and the state. It’s not. It never has been. I’m with Karl Polanyi – the market/state issue is a false dichotomy. It’s a war between good policy and bad policy.
The thing is course that the STOP is not to worry about the bubbles; the government will clean up the mess later. That appears to be the consensus going forward at this point still. So we should expect another asset bubble in the next ten to fifteen years.
Krugman’s history is selective, and his selection is politically motivated. A review of posts in this forum reveals similar selection effects. I don’t recall reading anything about the Garn-St. Germain Depository Institutions Act or other Reagan era reforms before.But Don and Krugman agree on one point. The statesmen did it. Krugman blames the Republicratic statesmen, and Don blames the Demoblicans. I agree with both of them.On the regulatory issue, I agree with Don. The problem with state “regulation” is that it obviously doesn’t regulate anything. So what if Reagan’s henchmen created the “unregulated” environment in which evil banking barons could loot the financial system? They did it, didn’t they? Why wouldn’t other statesmen do it again?State regulation is not about “protecting the system” from failures. It’s about selling “security” to nominal “capitalists”. It’s about socializing the risk and privatizing the profit. The “regulators” and “deregulators” are not rivals in this game. They’re on the same team. Each has his respective role to play.
The truly unregulated approach only works if individual investors and financial institutions continually fail. If they don’t fail, the system certainly is not “unregulated”. If any institutions are “too big to fail”, these institutions have simply been absorbed into the state and are “private” and “unregulated” only in some Orwellian nomenclature.
“After the US experience during the Great Depression, and after inflation and rising interest rates in the 1970s and disinflation and falling interest rates in the 1980s, I thought the fallacy of identifying tight money with high interest rates and easy money with low interest rates was dead. Apparently, old fallacies never die”- Milton FriedmanGranted, I agree that the 2002-2005 was silly, but not simply because they were low. The question is “low relative to what?”. The fact that a graph of inflation and inflation expectations matches your graph of the fed funds rate suggests that these nominal rate changes may be less important than they seem at first glance.
<danielkuehn: “these nominal rate changes may be less important than they seem at first glance.”
That might be true if lenders considered a borrower’s future income in determining his debt capacity. I don’t believe lenders do so. That’s why lower nominal interest rates enable larger home purchases, particularly for first time buyers.
Some lenders in the 21st century have ignored debt capacity in originating loans. But I think that practice has changed.
Oh definitely. You don’t have to convince me about the significance of the money illusion or the importance of nominal prices. I’m just saying that this decades-long decline is only as massive as your graph demonstrates when we’re talking in nominal terms. Nominal prices matter a whole lot, but the less steeply declining (if declining at all? I’m not sure) real interest rate matters too.
I find it interesting that Reagan is to blame for signing a bill, but the authors Garn and St. Germain, co-sponsor Schumer and the Congress that debated the bill and voted to pass it bear absolutely no responsibility.
I don’t think Krugman is careless and I don’t (really) think he’s an idiot. I accuse him of willful blindness. He sees only what advances his agenda — it just seems like idiocy.
Actually, as Krugman uses it, he means the turning point as best as I can tell, so that is what I am refuting. Have you read the article?It’s their JOB to understand “key points” but explain them in a way that both emphasizes their importance and acknowledges the broad spectrum of forces that converge to make history.Which basically means that there are no usefully definable key points. This isn’t backward looking psychohistory. Krugman is very run of the mill outside of his area of expertise, as we all are. Unless he was intimately involved in the creation of its legislation, its use, the way regulatory agencies dealt with it, etc. he is run of the mill.
Get thee to the archives.
I think the best thing to do with Krugman is to ignore him.
Oh, and I did not say that one should ignore others with contrary opinions.
ignoring nutjobs is generally good advice.
RE: “Which basically means that there are no usefully definable key points. This isn’t backward looking psychohistory. “This might be clear in your head, but I’d appreciate you explaining the logic.Look, clearly some decisions and actions in history impact future decisions and actions more than others. Can we agree on that? Then it shouldn’t be that controversial to point to certain decisions or actions that had a disproportionate impact on future decisions and actions, right? I really can’t believe you have problem with this. We have to be just talking past each other, because this really doesn’t seem so crazy to me. Of all the critiques of Krugman I expected to be raised, I must confess this epistemological point wasn’t one of them.
Re: “Unless he was intimately involved in the creation of its legislation, its use, the way regulatory agencies dealt with it, etc. he is run of the mill.”
That’s a bizarre standard. So what, is nobody able to intelligently comment on FDR’s economic policies because (I assume) everybody “intimately involved” in that legislation is dead now??? I think you’re talking yourself into a corner, Mommsen1625. Although since it seems to be a major issue with you, I should tell you I do deeply respect your experience with archiving. My brother worked in an archive, and I can appreciate the value and challenge of that sort of work.
This is true – you only said it was a rule of thumb you learned. Thanks for correcting me.
RE: “I think the best thing to do with Krugman is to ignore him.”
That impulse is unfortunate. I don’t understand it. It’s not a secret that despite my disagreements with Krugman I think he’s on target more often than Don or Russ are. But the last thing I would consider doing is to ignore Don and Russ. I don’t understand that line of thinking at all.
Do you know what psychohistory is? If not, look it up and you are most of the way there.
Then it shouldn’t be that controversial to point to certain decisions or actions that had a disproportionate impact on future decisions and actions, right?
I don’t disagree with this. However, determining which events, etc. are more primary than others is the problem. I don’t have any confidence that non-specialists can do this, when specialists shy away from trying to do it.
Of all the critiques of Krugman I expected to be raised, I must confess this epistemological point wasn’t one of them.
Well, we come from very different backgrounds because it is the sort of thing I would raise no matter who made this claim. It is like a giant, glaring bullseye to me.
Actually, I stated that one should ignore a position in a particular circumstance when particular phrases were being used. That is a far, far cry from your claim.
As for Krugman, well, his op-eds resemble to me every other non-specialist op-ed writer in the world regarding how they are put together, so I find him easy to ignore.
RE: “I don’t have any confidence that non-specialists can do this, when specialists shy away from trying to do it.”
When a historian specialist in Reagan’s economic policymaking wants to learn about this stuff, he goes and talks to guys like Krugman! When a historian wants to know the impact of regulatory changes, he talks to economists. I have no idea why you think the guy in the archives is a specialist in this particular case.
And to be clear, I don’t know anything about the Garn-St. Germain Act. He could be totally wrong on the facts. But he’s the right person to participate in this debate.
RE: “Do you know what psychohistory is? If not, look it up and you are most of the way there.”
1. I was really more curious about the logic behind your first sentence than I was about the second.
2. I looked up psychohistory and opened a whole new can of worms in the process – now you’ll have to explain this one to me too… how does this have anything to do with what Krugman was doing?
RE: “I don’t have any confidence that non-specialists can do this, when specialists shy away from trying to do it.”
And ultimately, I don’t even need to waste my time convincing you that Krugman is a specialist on economic policymaking in general and economic policymaking in the Reagan administration in particular. You clearly prefer prefer people with training in history rather than economics working with archival material – I’m not sure why. But none of that matters. You’re saying you don’t have confidence in his ability because of who he is. That’s not a counter-argument, mommsen1625. You haven’t given any reasons for why he’s wrong except that his job description and educational background isn’t what you consider to be worthy. The only comment out of the 21 that are currently on here that actually deals with Krugman’s actual argument (and not his credentials) is my first comment.
Aha – so “them” wasn’t refering to the person himself… a confusing, if correct, use of the pronoun. Fair enough! This has been fun.
Let’s just say I am extremely skeptical of Krugman’s ability to make this claim.
As long as you view blogging as entertainment it is never a waste.
You clearly prefer prefer people with training in history rather than economics working with archival material – I’m not sure why.
I think in general that economists are really, really crappy historians. Too much emphasis on math and modeling I would say.
The only comment out of the 21 that are currently on here that actually deals with Krugman’s actual argument (and not his credentials) is my first comment.
Well all live by useful rules of thumb; Krugman violated one of mine and you have as yet to describe why my rule of thumb is wrong.
Yes, respectfully yours, mommsen1625.
There are a plethora of Austrian economists who have been predicting this very thing. Indeed, Ron Paul predicted this.
You could debate The Freeman on this issue instead:
http://www.fee.org/pdf/the-freeman/feat7.pdf
Arguing that they are creations of the state is bit like arguing that speech is a creation of the state. Anyway, what happened was this: the UK under the Joint Stock Companies Act 1844 made legal a form of social organization was illegal prior to that. Those forms of social organization had been in existence informally prior to that. That does not mean that corporations are creations of the state; quite the contrary. It means that the state recognized what was already in existence.
One of the things you’ll find in these “just so” stories about things like the creation of the corporation, or of fee simple property, is that always lurking in the background are significant informal efforts to get to those points without the state. The state more often than not simply tends to formalize the informal.
Also, as a corollary you can always tell you are in a troubled place when the informal markets dominate the formal ones. Given how pervasive informal markets in just about everything in the U.S. are becoming that could mean trouble on the horizon for the U.S.
Something tells me you wouldn’t have the same reaction to people who selectively quote Krugman, like, say, Name’s post about ten hours ago that you neglected to raise similar concerns about.
I can’t control what muirgeo thinks about these things (I don’t personally get the sense he has any animosity towards Russ), and I can’t control what you’d prefer I write every time I comment – I appreciated the context muirgeo provided.
daniel kuehn: “Name’s post about ten hours ago that you neglected to raise similar concerns about.”
Sorry. I didn’t comment on Name’s post because I thought your intelligent response – with facts and relevant references – was much better than anything I could add.
Flattery will get you everywhere johndewey
Thanks for the link.