Open Letter to Paul Krugman

by Don Boudreaux on June 19, 2011

in Economics, Myths and Fallacies

Prof. Paul Krugman
Dep’t. of Economics
Princeton University

Dear Mr. Krugman:

Interviewed recently in “The Browser,
” you said that

if you ask a liberal or a saltwater economist, “What would somebody on the other side of this divide say here?  What would their version of it be?”  A liberal can do that.  A liberal can talk coherently about what the conservative view is because people like me actually do listen. We don’t think it’s right, but we pay enough attention to see what the other person is trying to get at.  The reverse is not true.  You try to get someone who is fiercely anti-Keynesian to even explain what a Keynesian economic argument is, they can’t do it.  They can’t get it remotely right.  Or if you ask a conservative,”What do liberals want?”  You get this bizarre stuff – for example, that liberals want everybody to ride trains, because it makes people more susceptible to collectivism.  You just have to look at the realities of the way each side talks and what they know.  One side of the picture is open-minded and sceptical.  We have views that are different, but they’re arrived at through paying attention.  The other side has dogmatic views.

Let’s overlook your failure to distinguish conservatives from libertarians – a failure that, for the point I’m about to make, is unimportant.

You’re able to conclude that “liberals” are open-minded thinkers while “conservatives” are dumb-as-dung dogmatists only because you compare the works of “liberal” scholars to the pronouncements of conservative popular pundits.  However valid or invalid is the artistic license used by conservative celebrities such as Glenn Beck and Rush Limbaugh (and, for that matter, by “liberal” celebrities such as Rachel Maddow and Keith Olbermann) to entertain large popular audiences, you’re wrong to equate the pronouncements of conservative media stars with the knowledge and works of conservative (and libertarian) scholars.

Because, as you claim, you study carefully the works of non-”liberal” scholars, you surely know that the late Frank Knight, Ludwig von Mises, F.A. Hayek, and Milton Friedman – influential economists whom you would classify as “conservative” – were all steeped in and treated seriously the writings of Keynes, Marx, Veblen, Galbraith, and other “liberal” thinkers.

The same is true for still-living influential non-”liberal” scholars.

I’d be obliged to conclude that you in fact, contrary your claim, do not carefully engage the works of non-”liberal” scholars if you insist that “liberal” scholarship is ignored by conservative and libertarian thinkers such as James Buchanan, Gordon Tullock, Ronald Coase, Armen Alchian, Harold Demsetz, Anna Schwartz, Gary Becker, Vernon Smith, Leland Yeager, Henry Manne, Deirdre McCloskey, Allan Meltzer, Richard Epstein, Tyler Cowen, Arnold Kling, George Selgin, Lawrence H. White, and James Q. Wilson, to name only a few.

You do a disservice to scholars such as these, as well as to scholarship generally, to assert that serious thinking is done only by you and your ideological cohorts.

Donald J. Boudreaux
Professor of Economics
George Mason University
Fairfax, VA 22030

UPDATE: Thanks to commenter Yosef for reminding me of this recent boast of Mr. Krugman:

Some have asked if there aren’t conservative sites I read regularly. Well, no. I will read anything I’ve been informed about that’s either interesting or revealing; but I don’t know of any economics or politics sites on that side that regularly provide analysis or information I need to take seriously.

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Nick June 19, 2011 at 1:36 pm

If I were to judge Krugman purely based on what he writes in the NYT, I would have to conclude that he is the one guilty of not being a serious thinker, and that his views are dogmatic in the face of all evidence to the contrary.

r June 19, 2011 at 4:40 pm

Agreed. I have never once heard Krugman demonstrate understanding of an opposing view. He maliciously misrepresents his opponents all of the time.

Hilariously, the quoted paragraph is a perfect example of Paul Krugman utterly failing to listen to what his opponents are saying.

Don, I wish you had pointed that out: Krugman’s claim refutes itself. What a clown Krugman is.

Scott June 19, 2011 at 8:45 pm

Ageed. Krugman is an ideologue of the highest degree. I don’t even think he’s aware of his own lies and distortions. Somebody please send this man a book on logic.

vikingvista June 19, 2011 at 9:34 pm

Like Austrian economics, logic is something he feels comfortable expounding upon without having read anything about it.

Socal Bill June 19, 2011 at 1:45 pm

Did Paul Krugman ever sit down and discuss economic principles with Milton Friedman? I mean, Mr. Friedman was so dogmatic, Krugman would have paid no attention to him.
Happy Fathers Day to all Dads.

Adam June 19, 2011 at 1:56 pm

What an arrogant little #$!%#$ Krugman is. Any time someone starts making a claim along the lines of “my side does (or doesn’t do) X, but the other guys sure do (or don’t)”, 99% of the time nothing but pure, unadulterated BS is about to follow.

vikingvista June 19, 2011 at 4:07 pm

Apparently he thinks a Nobel Prize is a license to give up on his reputation.

George June 19, 2011 at 6:31 pm

In a way, it is. I mean, what’s left to go for. Personally, I think Nobel gave it to him a few years ago because they saw the road he was on and wanted to get it out of the way sooner rather than later.

Dan J June 19, 2011 at 6:53 pm

Nobel prize has been given out of pure politics, often. So, the Nobel prize can easily be dismissed. They gave one to Obama for being………? What…..?……. A good deliverer of speeches?

vikingvista June 19, 2011 at 9:30 pm

“What’s left to go for?”

Integrity? Self-respect? Honesty?

John June 19, 2011 at 10:40 pm

Overrated. Such things don’t get you far in the cut-throat world of capitalism.

vikingvista June 19, 2011 at 11:49 pm

Or at least that’s what anticapitalists like to pretend.

John June 20, 2011 at 1:17 am

Hardly. I suppose a more precise formulation would be that Krugman’s perceived utility from being a star of the left is higher than what he gets from those three attitudes. In other words, the opportunity costs to Krugman in maintaining integrity, self-respect, and honesty are higher than for alternative courses of action. Now, if you are true to the values this site claims to espouse, who are you to judge him for that choice? That you don’t agree is fine, but it’s his choice, not yours.

vikingvista June 20, 2011 at 1:21 pm

“Now, if you are true to the values this site claims to espouse, who are you to judge him for that choice?”

This site espouses non-judgementalism? How you can read this site and miss 95+% of RR’s and DB’s posts, including this one, and even your own comment, is beyond me.

But since you are new to capitalism, let me give you a useful beginner’s lesson: Reputation is valuable. Now, I know that you think cooperation among thieves, killers, and liars is the example that disproves the rule, but that is because you mistakenly believe that capitalism encompasses any actions a person may engage in. “Capitalism” has meaning, only because it can be distinguished from other things. In particular, it excludes thieving, killing, and lying. Specifically, the cutting of people’s throats is not a capitalist activity.

But returning from your capitalism tangent, why should a person value integrity, honesty, and self-respect? Like most people who don’t understand this, and thus discard it, you will likely one day discover the consequences of choosing to take a stand against reality.

In Krugman’s case, he will learn that his sycophants don’t value his column because of the color of his hair, but because he supposedly speaks the truth in economic matters, validating their opinions as true. As more and more economists–who don’t receive a hefty paycheck from a propaganda outlet–recognize the fact that he has given up on integrity, Krugman will find that he has only his ignorant sycophants left. And when the sycophants see that, he is no longer of value to them.

And once you have famously lost integrity, it is damn near impossible to get it back. Once you have lost self-respect, happiness is only a lonely memory.

BTW, this is something most capitalists are acutely aware of.

John June 20, 2011 at 3:57 pm

Sorry man but I still don’t buy it. Your analysis neglects consideration of Krugman’s time horizon here. No matter what now, he will be remembered as a Nobel Prize willing economist. Thus, if he’s motivated by purely monetary considerations, I wager his calculation is that any such reckoning, as you propose, will occur farther in the future than he really cares. In the short to medium term, he’s going to make big bucks on the book and lecture circuit and live a damn good life. Now again, sorry if you don’t like him….but it’s his life, not yours.

vikingvista June 20, 2011 at 4:40 pm

It neglects no such thing. I’ll be the first to say that Krugman selling out his integrity is short-sighted. This non sequitur you keep bringing up about it being his life is odd too. I don’t care if he paints his skin green and cuts off his limbs. Maybe you are telling him that he shouldn’t destroy his life, but I am not. I’m merely pointing it out.

What you don’t buy, are the consequences of denying reality. In that particular, you and Krugman are soulmates.

John June 20, 2011 at 4:55 pm

Not sure how I am denying reality here. But let me ask you this….what’s the point of “pointing it out” as you say? I guess I’m not as economically gifted as you but, far as I can tell, the only thing you’re standing on is the fact that you don’t like what Krugman freely chooses to do. I mean really….who cares what he does?

vikingvista June 20, 2011 at 5:12 pm

Unlike you, I suppose, I don’t use a coin toss to determine what I will like and not like. The issue is one of causality–of consequences to actions. Some people build a reputation and attempt to live up to it. Others, like Krugman, attempt to use it to undermine its foundations. The former is an attempt at consistency. The latter is nihilistic–a deliberate contradiction–and neurotic. The two courses have different effects, and are well worth discussing–especially with those, such as yourself, who endanger themselves by not understanding.

But, if you truly have no interest in what people think or how they live their lives, then I will expect you to cease commenting on anything. It would be better than the contradiction of claiming not to care in Krugman’s case, but quite clearly caring that I choose to live my life judging the actions of others. I mean really, who cares what I do?

John June 20, 2011 at 9:43 pm

Ahh the tired old attempt to make it look like I’m contradicting myself by asking you legitimate questions. Maybe…just maybe…you’re the one whose wrong in what you think about me…..ever consider that possibility there vista? Or is critical self-reflection not on the menu? Sure sure…go ahead with some more dribble about how I’m a lefty, anti-capitalist, contradictory, or whatever else feel like digging up. Truth is, I don’t care much about what you said but do get benefit in knowing I make you take time to say it. ;-)

Krishnan June 20, 2011 at 4:29 am

Krugman got the Nobel because George Bush was President – it was a slap in the face to Bush. Nothing else.

John June 20, 2011 at 3:17 pm

Not really. Even Don admits that Krugman’s early work was top notch.

Methinks1776 June 19, 2011 at 1:57 pm

One side of the picture is open-minded and sceptical.

Say what? Had no idea he’s a comedian.

indianajim June 19, 2011 at 3:20 pm


Stone Glasgow June 19, 2011 at 6:19 pm

Great catch I love it.

Steve C. June 19, 2011 at 2:00 pm

As someone opined on another subject, “the jokes write themselves”.

As much as I support free speech, I’m more and more coming to believe that punditry has devolved into typifying Gresham’s Law.

Glenn Reynolds is right, the only response to this pretension is mockery!

BCanuck June 19, 2011 at 2:32 pm

Has the esteemed Dr. Krugman ever sullied himself and stooped so low as to reply to any of your notes?
Afterall, he is an opened minded chap always eager to engage in intelligent debate with thinkers of all political persuasions, right?

Don Boudreaux June 19, 2011 at 3:29 pm

Nope. I’m sure that Mr. Krugman has no earthly idea who I am and, were he to learn, would regard me to be utterly unworthy of his time and attention.

vikingvista June 19, 2011 at 8:38 pm

A good thing. If he knew you, he might mention you. That would attract the same hoard of dimwits to the Cafe that currently spew tired old nonsense in the comments section of his column.

BCanuck June 19, 2011 at 11:52 pm

I’m sure you’ll continue send your letters regardless.
And I am CERTAIN he does know who you are.

Perhaps, he does read them, but only secretly, under his covers at night, quietly gnashing his teeth… I digress ….

Yosef June 19, 2011 at 2:34 pm

I’ll let Krugman answer Krugman:

“Some have asked if there aren’t conservative sites I read regularly. Well, no. I will read anything I’ve been informed about that’s either interesting or revealing; but I don’t know of any economics or politics sites on that side that regularly provide analysis or information I need to take seriously.”

Ryan Vann June 20, 2011 at 1:38 pm

That’s rich

vidyohs June 19, 2011 at 2:43 pm

Krugman stands self condemned as a panderer to the looney left, pure and simple.

PLM June 19, 2011 at 2:58 pm

I despise Paul Krugman. He is a hateful, intelecually dishonest tool of the far left. He dresses fierce partisanship up as academic knowledge.

My question is, where is the Right’s counter to Krugman? We don’t have any one who is remotely as visible or vocal.

mitt romney hater June 19, 2011 at 3:14 pm

the Wall St. Journal has far greater readership than does the N.Y. Times. As an individual, Krugman is possibly more well-known than any conservative/libertarian, but rest-assured, those views are getting out there to the public :-)

Jacob Oost June 19, 2011 at 3:44 pm

But Krugman can provide a veneer of learned economics to any of his rants, especially after winning the Nobel Prize. It doesn’t matter to a leftist elite that he actually won the prize for formalizing some insights about international trade that had been common sense for ages, or that a lot of what he says lately violates the economics textbooks that he himself writes (robbing such rants of any economic validity), all they know is that they can take his words as Gospel and thus ignore anything some other economist has to say. Any time a left-winger wants to drench their argument in a veneer of intellectual honesty and economic rigor, they tie it to something Krugman or Ha Joon Chang or Galbraith said, and then in the next breath they’re back to advocating living wages or protectionism or government-funded pie fights or whatever.

vikingvista June 19, 2011 at 4:21 pm

All they know is that he says what they want to hear.

Dave Thomas June 19, 2011 at 8:59 pm

Krugman isn’t even important to the Keynesians. He is simply the latest monkey in a suit espousing the tired old dogma that taking money from one private individual, funneling it through a wasteful, inefficient bureaucracy, and redistributing it to another individual somehow magical adds value that they call the multiplier. It doesn’t matter that there is no empirical evidence of the multiplier during the massive government spending of the New Deal, the Great Society, Obama’s stimulus, etc.
It’s simply a dogma preached with religious zeal that relies on faith alone in the complete absence of empirical evidence. Krugman is simply another mouth at the microphone with the same old, unchanging message. He will disappear like a thief in the night only to be replaced by another automaton mouthing the same Keynesian script.

Rick Caird June 20, 2011 at 8:37 am

Your point on the Nobel Prize is on target. For years, I have wondered why this paper was such a big deal. The idea that like industries want to cluster together is but common sense to most businessmen. Business such as car dealers, nurseries, and high tech development usually end up co located. Why would it be such a surprise that happens with industries and countries?

It seems to me, the idea this paper was worthy of some kind of prize, or even of note, says more about the state of macroeconomics than it does about any cutting edge insight.

tdp June 20, 2011 at 8:50 pm

Bad news… Apparently both the high school AP courses for Micro and Macroeconomics push Keynesianism. No wonder there are so many leftists running amok in academia these days.

Tarheel Pundit June 19, 2011 at 3:16 pm

Fools generally don’t gravitate to the right.

vikingvista June 19, 2011 at 4:22 pm

Sounds like you’ve never been there.

Tarheel Pundit June 19, 2011 at 8:16 pm

“Don’t generally” never. But I count many more fools on the left.

Tarheel Pundit June 19, 2011 at 8:17 pm

Insert “doesn’t equal” before “never.”

Josh S June 20, 2011 at 1:47 pm

The difference between our idiots and their idiots is that our idiots don’t have Ivy League degrees and tenured professorships. Conservatives and libertarians that do have fancy pedigrees of one kind or another tend to actually be really smart, because they have to be in order to survive in the leftist world.

Ken Mueller June 19, 2011 at 8:35 pm

Are you counting Dr Krugman as a fool? Big mistake, way too kind.

DontPanic June 19, 2011 at 3:19 pm

There aren’t many conservative journalists for the same reason there aren’t many liberal owners of gun stores.

Thomas Sowell discusses how the right wing’s strongest supporters are found in business here:

Ken Mueller June 19, 2011 at 8:36 pm

How about Walter Williams added to the list of conservative economists. And fun to listen to as well.

Nick June 19, 2011 at 3:22 pm

I’ll assume by Right you meant conservative and not libertarian. Libertarians are starting to have more and more of a voice — see Stossel, Judge Napolitano, and the increasing popularity of blogs like this one — but they certainly aren’t as visible.

I would say that you have some counters to Krugman on the Right that let their talents go to waste by becoming parodies of themselves. In this case I’m thinking of Ann Coulter. She’s a lot more intelligent than people give her credit for, but for some reason discredits herself by making sweeping generalizations and by intentionally trying to piss people off (even those who might be her allies on issues, like Ron Paul libertarian-republicans).

Dan J June 19, 2011 at 7:37 pm

She makes millions on her persona. Why not continue to do what makes you stand out from the rest of columnists and authors. Much like Eugene Robinson who casts all issues into having racist overtures to it.
MSNBC and progressive media will avoid Sowell and Williams like the plague. The left have an image to project of protecting minorities from the racist, all white republicans, and cannot have folk like Allen West, Sowell, and Williams showing that Democrats and progressives hav only bribery and authoritative mandates to offer.
Have progressives ever offered a volunteer ideas to the issues?

tdp June 20, 2011 at 8:54 pm

The Republican Party has the easiest case in the world when it comes to winning voters over to the small government, low taxes, free market side of the fence. However, they blow it by sitting on their thumbs in Congress, refusing to cut defense spending or Medicare, railing against immigration (some even against free trade), and trying to force unpopular social positions onto their agenda. They also do absolutely nothing to combat their stereotype as racist, sexist, plutocrats and keep apologizing for their budget proposals like they’re a necessary evil rather than the one way to preserve America’s economic future.

tdp June 20, 2011 at 8:59 pm

Also, libertarians and the intellectual right do not have nearly the same access to the public’s attention because they lack a large, organized media and PR machine like the GOP or Looney Left. Ordinary people trust the leftists morons who appear to know what they’re talking about because of their degrees and ability to market themselves as intelligent. People won’t listen to libertarian arguments because they tend to be heavy on hard data and the parsing and subdivision of the broad, shallow statistical sweeps the left uses to make its arguments.

WhiskeyJim June 20, 2011 at 12:42 pm

Coulter takes the gloves off, just like Krugman does.

There is a great argument to be made, part of it simple game theory, that Libertarians could use more PR and less ‘respectable’ dialogue.

vikingvista June 20, 2011 at 1:29 pm

Sanctimony has worked goddamn wonders for the statists. Libertarians should definitely not hesitate to call a spade a spade. Bullies, busybodies, extortionists, thieves, thugs, control freaks, the power mad, killers, kidnappers, fools, liars, victimizers, and all those afflicted with Stockholm syndrome should be given the appropriately emotion-laden labels.

tdp June 20, 2011 at 9:04 pm

What we need is a large media outlet that provides a vehicle for conveying libertarian ideas, especially about economics, to the general public that is both heavy on data, facts and evidence and capture’s the public’s attention.

Josh S June 20, 2011 at 1:49 pm

Coulter does such a good job pissing those people off precisely because she’s so smart. Someone’s gotta do that job, and I’m glad she’s volunteered for it. Leave C Krauthammer and G Will to provide the even-handed treatment.

tdp June 20, 2011 at 9:03 pm

Krauthammer’s a Neocon and Will tends to make the occasional ill-advised generalization that reinforces stereotypes about conservatives, especially to Washington Post readers, who are only slightly less liberal than those who read the Times.

W.E.Heasley June 19, 2011 at 3:23 pm

“Liberals claim to want to give a hearing to other views but then are shocked and offended to discover that there are other views”. – William F. Buckley, Jr.

indianajim June 19, 2011 at 6:00 pm

or feign denial that others exist, or actually are zombies …

Justin P June 19, 2011 at 3:35 pm

So Krugman says that non-liberal scholars don’t know anything about Keynes, but he doesn’t read them anyway. So how does he know? Unless he is projecting. He really wants to say liberals don’t even know Keynes, like Ezra Klein or anyone writing on the Daily Kos.

jcpederson June 19, 2011 at 11:43 pm

It does seem like something that one could do a study on – let one person express a view, and let the other person listen, then write down what that person said/felt, then have a third person evaluate how faithfully they heard the other person, then compare the different groups.

Jacob Oost June 19, 2011 at 3:39 pm

Most *Keynesians* can’t provide an adequate description of a Keynesian argument. Keynes has become one of those economists like Marx or Friedman whose actual teachings have been ignored, even by professional economists, and a straw man version of their teachings has been put in place and widely circulated.

Krugman really knows how to set himself up for failure. It wouldn’t take much effort to find five or six simple examples of where he badly bungles representing something Hayek or Friedman or Laffer said.

More to the point, he’s wrong, there are plenty of leftist activists and writers who push for things like trains *because* of their religion of collectivism. How many times have we heard a left-wing economist or academic admit that they favored government-ran schools or minimum wages or some such in spite of the economic logic against it, simply because it “built public spirit” or something similar?

Dan J June 19, 2011 at 7:44 pm

I don’t hear from the far left just volunteering their own property to the causes they demand in large amounts they claim others should be doing. Warren Buffet says ‘tax me more’. Just send in a check. Nobody has forbidden someome like this from doing so. But, he won’t. So he is full of crap.

Scott G June 19, 2011 at 4:02 pm

Boudreaux lands a devastating blow to the face of Krugman! High five!

vikingvista June 19, 2011 at 4:37 pm

Like shooting fish in a barrel. Were it not for Krugman’s celebrity, critiquing him wouldn’t be worth DB’s time.

indianajim June 19, 2011 at 6:02 pm

I’ve actually never seen whether or not it IS easy to shoot fish in a barrel; is it. (Well certainly with a shot gun).

SaulOhio June 19, 2011 at 7:00 pm

Mythbusters did do an episode on shooting fish in a barrel. I think their conclusion was myth confirmed.

vikingvista June 19, 2011 at 8:42 pm

Sorry, I meant a shotgun. And a high fish density too. Short range, and lid off as well.

indianajim June 20, 2011 at 7:34 am

Like killing a mouse with a cannon (at short range).

jeffmeh June 20, 2011 at 9:08 am
Richard W. Fulmer June 19, 2011 at 4:10 pm

In his columns, Krugman routinely describes those who disagree with him as either stupid, ignorant, or evil. Anyone who understands what, say, Thomas Sowell writes, could not believe that he is any of those things. One could argue that he is mistaken (though you’d better do your homework before making such a claim). Krugman is either incapable of understanding Sowell (and is therefore stupid, because Sowell writes with amazing clarity), or he has not read Sowell (and is therefore ignorant), or he has read and understands Sowell and knows that he is neither stupid, ignorant, nor evil (and therefore, by lying about Sowell and those like him, reveals himself to be…)

Justin P June 19, 2011 at 9:09 pm

I pick the last one.

Krishnan June 20, 2011 at 4:35 am

In Krugman’s world, people like Sowell and Williams are dangerous – they speak and write clearly – and are not the types that the Democrats want to claim as their own because they think for themselves …

Krugman is, I believe, terrified of intellectuals like Sowell and Williams.

So, in their terror, people like Krugman will call names, use epithets – anything – to disguise their fear of the reality that THEY are wrong and that Sowell and Williams and Friedman (Milton) and others are right.

Jeff Perren June 20, 2011 at 12:58 pm

I don’t generally mind when Krugman and others on the Left describe those on ‘the right’ as stupid, ignorant, or evil. I am as convinced as they are that those on the LEFT are stupid, ignorant, or evil – and generally the latter two at the same time. Or, more accurately, they are hide-bound evasive – since it takes massive and continual evasion to avoid knowing consciously that Progressivism is both false and evil.

Like them, though, I believe the issue is primarily a moral one and so I have no problem when they describe their opponents as immoral in some degree. The utilitarian arguments on both sides are usually just an attempt to bolster an already arrived at conclusion to support the moral outcome desired. Better to let that take a back seat and argue directly about moral standards and consequences. In the end, it’s the only way people are going to be persuaded since the facts and their analysis are complex.

DG Lesvic June 19, 2011 at 4:14 pm

You included George Selgin, who has swallowed the Keynesian bait, hook, line, and sinker, among the “fiercely anti-Keynesians.”

With “fiercely anti-Keynesians” like that, we don’t need wobbly anti-Keynesians.

Stone Glasgow June 19, 2011 at 6:32 pm

Why do you think that Selgin is not anti-Keynesian?

DG Lesvic June 19, 2011 at 6:59 pm

I didn’t say that he wasn’t an anti-Keynesian, but that he was a wobbly one. For he has succumbed to the Keynesian “money illusion” theory of unemployment and inflationist “demand management” or “monetary equilibrium” theory of combating it that has driven public policy in Europe and America over the last 75 years.

Here is an excerpt from Macro Schmacro, and, I hope, a link to it.

A withdrawal of money from circulation and falling prices, or “deflation,” is the Keynesian Nightmare. But, if the prices at which you bought were falling along with those at which you sold, your real wages, profits, and purchasing power would be the same. So, why wouldn’t commerce go on as before, at lower prices?

Because, Keynes argued, wages were “sticky.” The workers, unaware of the new monetary reality, and holding out for the same wages as before, were pricing themselves out of the market. So to keep physical demand for them from falling, the authorities had to keep monetary demand from falling. They had to inject money into the circulatory stream to replace that which the market had withdrawn.

That is the Keynesian “money illusion” theory of unemployment, and basis of the inflationist “demand management” or “monetary equilibrium” theory that has driven public policy in Western Europe and America over the last 75 years.

So far as “sticky wages” were a consequence of minimum wage laws, why not just repeal the laws? So far as they were a consequence of the time it took the workers to adjust their expectations downward, why do anything? Their unemployment is a self-inflicted pain, like that of “drug abuse.” Why is that anyone else’s concern and a War on Unemployment any different from the War on Drugs, a war on everyone in order to save the weak and foolish from themselves?

Why wouldn’t the pain of unemployment itself hasten adjustment to the new monetary reality? What could work better and faster than starvation?

To say that wages are intractably sticky, and the market self-destructive, is to say that it is mad; and that is a theory not of economics but psychology, and a denial of economics, which must presume that the market actors are not entirely mad.

The paternalistic credo must assume that they are, for, if you would force them to behave sensibly, you couldn’t admit that they could do so on their own. So the market had to be mad, running off cliffs without public officials to restrain it. And, however mad their own behavior, the market made them do it.

Since the workers cared more for money than the things it bought, and would rather starve than live even better at lower nominal wages, Keynesian Wise Men had to underwrite the madness, to save the madmen from themselves.

Who really was mad?

The Wall Street Journal, Jan. 8, 2009, recalled that “During a 1934 dinner…”

Dan J June 19, 2011 at 7:54 pm

But, is it any wonder that someone who has made alot of money and found much success would then move on to theory and trying to project his/her own values on to the rest os society. Like his colleague Thomas Friedman, they wish to ‘right any wrongs’ in society, even if it means abandonment of liberty or laws of economics.

Speedmaster June 19, 2011 at 4:42 pm


This is why you are a serious economist and Krugman is first a leftist political operative.

ben June 19, 2011 at 4:47 pm

What a disgrace Paul Krugman is. He allowed George W Bush to destroy him. It is genuinely disheartening to see such a brilliant economist abandon reason and principle and embarrass himself and his former profession like this. Why people like Tyler Cowen continue to cite Krugman’s more recent writing, which is wrong about as often as it is right or insightful, is beyond me when there are plenty less famous but more coherent commentators on the economy than Paul Krugman.

The Krugman/Bush pic post his Nobel was priceless. Easily Krugman’s best moment in the last decade.

JvG June 19, 2011 at 9:34 pm

I agree – the worst part of all this is Krugman’s dillution of his own contribution; he has a great many things to say, and would otherwise be a valuable contribution to any honest discussion. However, as it stands, he seems more able and willing to be a polarizing figure, distorting the economic issues with his own apparent personal and political agenda. Like Demsetz said, the conditions of the political system are quite separate from the efficiency of the economic system in question. Krugman seems to want to obfuscate the issue by making the interactions *between* them out to be characteristics *of* them.

Acertainflorentine June 19, 2011 at 4:57 pm

I have long thought that Dr. Krugman could say nothing that would surprise me. His comments here are so lacking in self-awareness as to indicate some sort of cognitive disorder. His columns are consistently mean-spirited and hateful and although he regards himself as a Keynesian a large portion of his analyses are simply along the lines that non-Keynesians are stupid, and in some cases “evil.” He is a political hack of the first order and is particularly deceitful because he is able to put a scholarly veneer on his polemics.

RC June 19, 2011 at 5:39 pm


I would just like to point out that “dogmatic” does not mean “incapable of serious thinking”.
Besides, someone who may be a great thinker and yet regards the government – or any state interventionism – as the coming of Satan deservedly should not be treated seriously.


RC June 19, 2011 at 5:53 pm

“Besides, someone who may be a great thinker and yet regards the government – or any state interventionism – as the coming of Satan deservedly should not be treated seriously.”

And btw, the same is true for free markets, which is why it is funny you mention Marx as an economist in the first place. Politicised science is not science.

Sam Grove June 19, 2011 at 11:06 pm

I shall attempt to explain it for you:

As human individuals are the only recognized agents of moral capability, evil can only be a product of human individuals, therefore, to suppose that government is Satan manifest is a misdirection.

The problem of government, in the libertarian view, is that it is a means by which individuals manage to secure general permission to engage in evil activity.

RC June 19, 2011 at 11:22 pm

Sam Grove,

But what is that evil activity? Is every state action (performed by certain individuals) – outside of its “night watchman” role – evil? Because I get the impression that most libertarians think so, and that severely dampens the possibility of having a rational discussion on the role of the state in the economy.
Not that libertarians are worse than leftists on this matter…


Sam Grove June 20, 2011 at 1:04 am

In your judgement:
What may individuals do?
What may they not do?

That is, what rules do you expect individuals and most groups of individuals to follow and why?
How is the collection of individuals called the state different in regard to those rules?

RC June 20, 2011 at 11:00 am

Sam Grove,

I think I get your point – governmental action performed by individuals should be judged the same way as non-governmental actions of individuals.Still, I’m pretty much sure that different people would accept a different degree of coercion, with a lot depending on the circumstances.
But isn’t that for philosophers to debate? Why bring this matter to economics? Economists are people and have their moral compasses, but they should be nevertheless capable of making objective science. And that’s my point.


vikingvista June 20, 2011 at 1:40 pm

“people would accept a different degree of coercion”

People would freely choose being denied free choice? I’ll bet you’ve even uttered the absurdity “I’m willing to pay a certain amount of taxes.”

Guys, we really need to find a term for this widespread contradiction.

RC June 20, 2011 at 2:01 pm


Perhaps I screwed up that sentence. When I wrote that “people would accept a different degree of coercion” I meant that people will justify coercing others to different degrees. An anarchocapitalist will reject coercion altogether, a minarchist will accept coercion only to the point of securing funds for the minimum state, a moderate libertarian will accept coercing others for some basic services/programs and so on.
But what is absurd with the statement “I’m willing to pay a certain amount of taxes”? If I support paying those taxes, and vote for party X that introduces those taxes, then am I coerced when the taxman arrives?


vikingvista June 20, 2011 at 2:14 pm

“Willing” implies free will–a choice. Taxes are, by definition, not a choice. And as others here routinely point out, if you don’t believe me, try openly not paying your taxes, and see if you succeed.

RC June 20, 2011 at 2:23 pm


Paying taxes is, of course, not a choice. However, these taxes did not come out of nowhere – someone had to introduce them, otherwise they would not exist. And introducing or raising taxes is a choice, just like lowering them or abolishing them is also a choice.


vikingvista June 20, 2011 at 3:07 pm


The point is that it is not YOUR choice. So if you say (as so many confused people do), “*I* am willing to pay taxes”, you are not making any sense.

RC June 20, 2011 at 4:14 pm


When people say “I am willing to pay my taxes” they usually mean “I do not object morally to the taxes I must pay”. I know that people should be more precise with the words they use, but sadly they are not, so one often has to figure out what do they mean when they state something.
As for your argument, that it is not my choice… Well, indirectly I do have a choice by voting. If I vote for policy X – whether that is going to war, abolishing the FED, ending the war on drugs, health care, whatever – and a majority of other voters agree with me, then that policy will be implemented, and I will be partly responsible.


vikingvista June 20, 2011 at 4:51 pm

“I do not object morally to the taxes I must pay”

This still makes no sense. Objection and morality are utterly irrelevant in the absence of choice. You are a moral actor, not a rock. You can say that you don’t attempt to physically resist paying taxes. You can say that *IF* you had a choice, you would choose to send money to the government. But you cannot rationally say that you choose to pay taxes, or that you morally support your own compulsion. The very definition of the terms prevent it.

And you keep on with the program about claiming that you do have a choice to pay taxes. Now it is an “indirect” choice. Prove to me that you have a choice. Choose to openly not pay your taxes, and show me that you succeed. If you cannot, then CLEARLY you have no choice, not even “indirect”. If you can, then I and millions of others will be grateful for the revelation.

RC June 20, 2011 at 5:26 pm


OK then, let it be “You can say that *IF* you had a choice, you would choose to send money to the government.”
I still think that well-being is the key here. Clearly, someone who would send money to the government if he/she had a choice does not feel coercion the same way as the person who would not voluntarily give money to the government. The problem of coercion is, after all, the problem of reducing the well-being of the coerced person.
If, for example, I have a desire to go to the shop, and on my way there someone will threaten me and demand that I go to that shop, clearly I will be coerced, but my well-being will not be reduced.
As for the second part – you misunderstood me (perhaps I explained poorly?), as I already acknowledged that people do not have a choice to pay taxes.
What I am arguing is that people have a choice when it comes to establishing (or not) taxes. Taxation would not exist if a sufficient number of people would not support it – and that is my point. Similarly, if the majority of people were anti-taxation, Ron Paul would be elected and taxation would be eliminated or at least significantly reduced. That’s why I brought up the voting matter.


vikingvista June 20, 2011 at 7:36 pm

“What I am arguing is that people have a choice when it comes to establishing (or not) taxes.”

As a matter of fact, you never had a choice in that regard, and neither did I. If you disagree, then prove it to me by choosing to not establish taxes. I would think by now this point would be reflexive.

I think what you want to say, is that democratic decision making gives you a choice. But clearly, when you test it, you find out that is a myth. Democracy is unavoidably coercive. The allure is the claim that it gives you choice, which everyone naturally wants. The reality is that it imposes someone else’s will upon you.

State democracy is not about choice. If choice were the goal, you would simply leave people alone to their choices. Democracy is entirely about denying choice. It’s whole purpose is the suppression of those who disagree. Democracy has no meaning or purpose without dissenters. And dissenters must never be allowed to have their way–whatever the cost to human liberty.

What you choose in democracy is to vote or not vote, to check from a set of boxes presented to you, or not. And regardless of what you choose or if you choose, you will be forced to comply.

RC June 20, 2011 at 8:31 pm


There is no disagreement among us with regards to the nature of democracy. Democracy is the suppression of the minority by the majority, and to argue otherwise would be ridiculous.

However, I cannot agree with your dismissive description of voting as a set of boxes. By picking a box, you – along with others – pick an option that best reflects your preferences regarding the amount of liberty & coercion in society. That’s why I brought up Ron Paul – you really wouldn’t bother voting if it was a choice between him and Obama?

I think this is it for me. Thank you for the conversation.


vikingvista June 20, 2011 at 9:59 pm

You think voting for Ron Paul constitutes a choice to pay or not pay your taxes?

RC June 20, 2011 at 10:31 pm


What I meant is that if Ron Paul is elected, there will be no more taxes (or at least they will be far lower).
So by voting for him you manifest your preferences – in this case your preference of a tax-free society.


vikingvista June 21, 2011 at 12:37 pm

I manifest my preferences all the time on this forum. And that has no less effect on breeding choices, than does voting. Perhaps more, if I’ve ever managed to affect a person’s thinking.

Democracy does at times, rare times, serve as a limited republican check against the inevitable growth of other state institutions, but it is not an instrument of individual choice. Much more often, it is a tool of the state to kill choice.

Dan J June 23, 2011 at 1:19 am

So, your just awaiting the……….end? There’s choice….. One choice will result in violent action. But, a choice it is.

Just havin fun…..

vikingvista June 23, 2011 at 1:34 am

Dan J,

Violence is the friend of the state. Everyone, including it seems most libertarians, turn to the state for security. If you oppose the state, you simply must oppose any violence that would interest the state.

Dan J June 23, 2011 at 2:04 am

Ok…. I am pretty sure I understand your perspective on the state……. Care to point me into a general direction on full understandment of the emergent order? One that gives a non-Phd reasoning. Also, assuming there is a vision of how order comes together and a scenario to envision….. I am unlikely to agree that non-statist military will stand up to the statist military… I cannot at this time…. And even in a non-violent fall of statist govt, there is a greater likelyhood of French Revolution style scenario with reinstatement of state as opposed to ‘emergent order’ of Libertarianism. Most of us have been accustomed to a state and are unlikely to welcome insecurity assumed by lack of state.

vikingvista June 24, 2011 at 4:05 pm

Dan J,

There a rich literature on the matter going back over a century. Search for essays by those who call themselves free market anarchists, anarchocapitalists, agorists, voluntaryists, natural order advocates. Accessible names include Nock, Rothbard, Spooner, Hoppe, and Block. Check out the sources, which should more appropriately be called “”. Check out some of Stefan Molyneaux’s well-made short videos at stefbot on YouTube.

The questions you may have regarding free market order aren’t new–e.g. free market security, law, and money–but rather were some of the first and most obvious questions to be addressed. Whether you come to prefer voluntary orders for all things or not, I promise you it will change the way to think and talk about these issues.

Pom-Pom June 28, 2011 at 10:56 am

RC> “If I vote for policy X…”

This makes no sense unless you are voting for some proposition (as in CA), which I would argue most people never really understand the consequences of. (So it is questionable that many of those even voting for a proposition really know what they are voting for.)

Most times votes are for individuals, not policies. Go out on the street and randomly pick 100 people. Ask them who their reps are. Ask them what legislation (policy) their reps voted for. Ask them how their reps voted. Ask them the consequences of the policies given supposed impartial data.

You live in a fantasy land.

Ryan Vann June 20, 2011 at 1:48 pm

Das Capital was basically positive economics.

Sean June 19, 2011 at 7:07 pm

Yes so many libertarian economists think Satan is the one intervening in the economy by means of the government. That’s it exactly. I remember that was what Mises said. He even wrote a book called, “Interventionism: Satan’s Spawn”. Hayek followed up with, “Your Leftist Congressman: Beelzebub in Disguise”. It was all started by the Irishman Cantillon who penned the famous non-leftist screed, “De Gawvernmint, ’tis de Divil, Sure”.

They could have just said that they thought it was either morally or economically unjustified and counterproductive for a government to intervene in the economy, but being infused with the spirit of irrationality and the archetype of the prophet, they just couldn’t help themselves.

Some people even have the temerity to think that coercion is morally wrong, but these clealry go too far. They don’t take the more reasonable path which admits that a little bit of coercion isn’t so bad. I mean a violent thug really isn’t Satan, after all. Why blow things all out of proportion and politicize everything?

RC June 19, 2011 at 7:44 pm


Thank you for proving my point. I brought up Satan as an universal symbol of moral evil that everyone can understand. And look how you bring in morality into value-free science… Government is Satan for libertarians just like the market is Satan for Marxists, even if most of them are atheists.
Btw, since you hate coercion so much, you might rethink yourself as being a libertarian. These libertarians are the strongest defenders of private property, even though private property is an institution established through coercion (often bloody coercion – just ask the Native Americans). So think it over.


Sean June 19, 2011 at 8:25 pm

It just never occurred to me that libertarians believe in private property! I am so naive. I also didn’t realize that Native Americans had no private property! I had thought that such things were just myths, like the myth of the peaceful primitive. Having read that when land and other resources became scarce, property rules were invoked to avoid conflict among Plains Indians, I concluded that some system of property existed. If that is so, then apparently Satan was here in America prior to the colonists or perhaps the colonists brought him.

But let me see here, European powers sent over some mercenary ‘explorers’ who enslaved people, looted them, and robbed them, and this is because they were trying to impose property. It sounds more like theft to me which implies that the natives one way or another were the proper owners of the gold, land, and other things, including their own bodies. But the natives, those noble communitarians, didn’t mind being enslaved, because they had no concept that they were the proper decision-makers concerning their own persons.

How naive of me to think that respect for property sets a limitation on coercion. Also, how plainly duped I have been to believe on purely value-free terms that coercion decreases the well-being of the coerced and that free labor is more productive than coerced labor. But perhaps by value free you mean an economics that ignores the fact that humans desire things, have preferences, and try to achieve them, in which case there is no economics, but perhaps psycho-physics or some form of behaviorism. If you are interested in this sort of value free science, then why are you worried about the opinions of the Native Americans? Opinions are values. They could have no place in such a science.

I am confused: you bring in the image of Satan “as a universal symbol of moral evil” and then accuse me of bringing morality into the discussion. I do hope that I have not brought self-contradiction into the discussion.

RC June 19, 2011 at 9:06 pm


1. I never claimed that Native Americans had no private property. I pointed out that they were coerced by predecessors of today’s private property holders – and that means that today’s property has its origin in coercion.

2. Coercion decreases the well-being of the coerced – that is true. Again, show me where I argued otherwise.
(This does not mean, however, that all coercion is evil – a bad parent may not want to provide for his baby child, yet almost everyone would agree that coercing him is justified in this situation.)

3. A value-free science is one that explains phenomena in an objective way. One is free then to conclude whether the effects of policy X are desirable or not.
The problem is that both sides – libertarians and leftists – are apparently not interested in such an objective analysis.

4. You clearly did bring morality into the discussion, as you brought up the matter of coercion. Remember, we are debating the role of economists, not philosophers.

Hope I cleared things up a bit.


Scott June 20, 2011 at 3:56 am

“Is every state action (performed by certain individuals) – outside of its “night watchman” role – evil? Because I get the impression that most libertarians think so,” Here we go with a foundation-less assertion.

However,… libertarians and classical liberals believe that government’s role should be to protect individual liberties. Are other government actions good? Is social security good? Well, since social security is a progressive redistribution of wealth(benefits do not equal contributions), that depends on whether you believe that one person should be coerced to labor a certain percentage of his day for another human being against his will. In a socialist’s mind, yes this is a good thing. To a true liberal, it is not. I am a true liberal: I do not believe I hold a claim to your personal property simply because I exist.

RC June 20, 2011 at 11:18 am


I do not think my assertion was “foundation-less”, since later you clearly stated that libertarians and classical liberals want the government to protect individual liberties. And that is a “night watchman” state. Any state that does more – whether it be funding education, protecting the environment, affirmative action and so on – must in some way infringe on someone’s liberty.


Jeff Perren June 20, 2011 at 1:41 pm

“how plainly duped I have been to believe on purely value-free terms that coercion decreases the well-being of the coerced ”

“Well being” is a value-laden term; it presupposes a standard of value. An economics without any implied ethics is an impossibility.

vikingvista June 20, 2011 at 3:28 pm

“Any state that does more – whether it be funding education, protecting the environment, affirmative action and so on – must in some way infringe on someone’s liberty.”

Any state must infringe on someone’s liberty.

Dan J June 19, 2011 at 7:58 pm

Well, the far reaching results of uninterrupted or or unchecked interventionist govt has given us the the extreme of Stalin, Hitler , Mussolini, Mao, Castro, Chavez, etc.,…..or what many would consider beyond immoral and into pure evil.

RC June 19, 2011 at 8:17 pm

Dan J,

I agree with you, but that’s not my point. I’m just pointing out that science should be value-free – and this is impossible if one side treats the state as the devil and the other side treats it as god.
Leftists will smear libertarians for being dogmatic ideologues and vice versa – so I really do not know what Don is complaining about here…


Dan J June 20, 2011 at 12:05 am

Seems as if he is pointing out that very thing about the ivory tower economist.
And, I am not so sure that ‘value-free’ is possible, as you say. But, the value of expert panels and the enlightened managing millions of people’s lives is historically a failure and ultimately leads to misery, despair, and poverty distributed amongst the masses.
‘we are who we have been waiting for’ – Barak Hussein
Obama…….. The new group in can suddenly change thousands of years of failed central planning. This central planning is cornerstone to Krugman, Obama, Thomas Friedman, and the others who make up the progressive left.
Krugman’s piece was nothing short of an F.U. To all who disagree with his assertions. He is saying that any opinions that are in direct opposition to his, are not worth his time all the while complaining of the oppositions unwillingness to attempt to understand his position.
His piece almost seems like a skit written for a comedy show.

RC June 20, 2011 at 11:06 am

Dan J,

I generally agree with your opinion of Krugman. However, I do not think that it is only the so-called “progressive left” that is showing a F.U. to those that disagree with them.
I think just as “progressives” are biased against market solutions, libertarians are biased against state solutions. Perhaps a night watchman state is desirable. But that requires cold analysis, something idealogues are usually incapable of doing.


vikingvista June 20, 2011 at 1:54 pm

“science should be value-free”

Which, of course, is a value statement. You should spend some time rooting out your contradictions.

Dan J June 20, 2011 at 11:03 pm

What I value about Libertarians, of which I am not, is the value of liberty. SS, Medicare, obamacre, and the likes are forced mandatory participation. These and other govt programs are full of malfeasance, corruption and mismanagement. Advocates and supporters of more govt programs like these shall not find me giving much or any attention to. It is an exercise in futility. No point in Wasting time with such gibberish less I be dressed in a jacket that hugs myself and placed in a padded room. It is like trying to put a square peg in a round hole.
But, yet Krugman and Friedman continue to push failed ideas with tweaks to the their line of reasoning.

Dan J June 21, 2011 at 12:01 am

What Libertarians are saying, is that govt run amok, is inevitable. Man does not have ability, save once in a lifetime, of not falling prey to the power of statism or his own narcissism. The whole reasoning behind the Constitution is the preceding sentence. Assuming their own fallibility, they left the ability to change their mistakes with a supermajority. But, it left…. HA! Left…… The door open for the ‘Demi-gods’ who would bastardize the openings for their own narcissistic ways.

I only hope that this has just been one long era of learning for the American society and that we neednt the cruel and painful, full experiment of govt central planning failures to embolden society for the necessary changes to solidify our wants for liberty from dictating govt.

vikingvista June 21, 2011 at 12:57 am

Dan J,

More simply put, the problem is monopoly. True monopoly, as in the successful violent suppression of competition.

Dan J June 21, 2011 at 2:06 am

Yet, I somehow think that what the Founding Fathers envisioned was very sparse govt, except at state level. At the state level, the competition would prevent to far reaching monopolistic ‘inevitability ‘ from coming to fruition. When the state (US state like NY) is void of of their pillars (people, capital, and productive businesses alike) , the failed state will be forced into submitting to free and open marks along with limiting it’s own oppressions. I agree, that this would transpire under a weak federal govt and fully empowered state govts, leaving the Feds to only have the powers of securing those Rights in the Bill of Rights.
Ultimately, the power hungry narcissists may have found another avenue to travel for securing their agendas, but I believe the Liberty, Life, and seeking of Happiness would have been sustained much longer. I only quibble with you on going too far, too fast… And with military protections from the statists across the globe….. Who may have ‘wasted’ so much resources on destruction, but has shown to be a successful model for military strength.

Scott June 21, 2011 at 8:50 am

What I don’t understand is how anyone could think that classical liberals regards all government as bad. For instance, I believe that monetary policy and fiscal policy could stabilize fluctuations in the market. That would be a government solution. The problem is when there aren’t enough checks on government. The problem is that a sitting president and congress can use fiscal policy to stimulate false growth even when it is not necessary, encouraging malinvestment and setting up the next recession to be even worse. For some reason, the government cannot help but encourage malinvestment exactly at the moment they should be doing the opposite. In the interest of getting reelected, restraint is not a strong suit for politicians, regardless of the party affiliation. It’s like the inmates are guarding the prison. The founders understood this and created limited government as a counterweight.

While I believe that government needs to have limits to its power, I also believe that corporations as well as individuals must have limits. Corporations and other individuals can violate my liberty just as well as the government.

RC, Your assertion that classical liberals tend to favor market solutions, while american liberals (socialists) tend to favor government solutions is not far off. My problem with government solutions is that they usually require coercion or forced participation, while market solutions allow individuals the choice to participate. I prefer freedom of choice, hence I prefer market solutions, hence, I refer to myself as a liberal. For a large majority of american political issues, liberal is the exact opposite of what it is supposed to mean.

vikingvista June 21, 2011 at 12:54 pm

Dan J,

I don’t often comment on how “fast” I think changes should come, but I occasionally comment on how fast I expect them to come utilizing my preferred method of affecting change. Are you saying that I am too patient for you?

You are right about the Founders’ intent. But intending to restrain Monopoly by creating it, is a contradiction. They didn’t solve the problem of monopoly. The only solution is competition and ability to fail–i.e. no monopoly at all.

vikingvista June 21, 2011 at 2:23 pm

To: Affect/effect police:

I know. But there is no edit button.

Dan J June 22, 2011 at 12:21 am

I have not witnessed your ‘preferred methods of effecting change’ or your expectations on the speed of progress, yet, on the white screen.
I will have to look in the future for your excerpts.

Pom-Pom June 28, 2011 at 12:49 pm

rc> “I do not think that it is only the so-called ‘progressive left’ that is showing a F.U. to those that disagree with them.”

It is SOP for “leftists.” For libertarian/libertarian-like people the automatic dismissal of “leftists” does often exist, but it only comes long after one realizes the so-called “open-mindedness” of “leftists” is doublespeak. It is asymmetrical they *never* try honest dialog — I can’t think of a single example in my life, save perhaps one isolated incidence. I know this from experience after experience. Most libertarians finally realize logical arguments don’t matter.

Observer_Guy1 June 19, 2011 at 6:10 pm

Krugman, like other liberal thinkers, look down upon libertarians because we don’t propose grandiose ideas to address every social ill that comes along. We look at a society and see free people making decisions that only they are qualified to make. Compare this to liberal thinkers whose “big ideas” usually involve depriving us of liberty and taking more of our money.

Dr. T June 19, 2011 at 6:47 pm

I don’t believe that Krugman has a cognitive disorder or Bush Derangement Syndrome. I believe that Krugman knowingly lies about political and economic issues, about other economists, and about himself. I suspect that he justifies the lies as necessary tactics in the fight to promote the left-wing ideology he supports. I put him in the same category as the left-wingers who remove or deface signs supporting Republican candidates: they believe that lying, cheating, and dirty tricks are acceptable means when the end is their beloved socialist nannystate.

muirgeo June 19, 2011 at 6:56 pm

“Keynesian theory initially prevailed because it did a far better job than classical orthodoxy of making sense of the world around us, and Friedman’s critique of Keynes became so influential largely because he correctly identified Keynesianism’s weak points. And just to be clear: although this essay argues that Friedman was wrong on some issues, and sometimes seemed less than honest with his readers, I regard him as a great economist and a great man.”


MJGreen June 19, 2011 at 8:08 pm

And so here Krugman is being less than honest with his readers.

I think we all know that Krugman does not consider all ‘right-wing’ economists to be idiots. What he really believes doesn’t matter; it’s what he’s asserting in this interview. He’s perpetuating an uncharitable and intellectually destructive narrative, and his Friedman essay suggests he is doing this willfully.

Thomas A. Coss June 19, 2011 at 7:09 pm

“It isn’t that our liberal friends are wrong, it’s just that much of what they think they know isn’t so”. Reagan 1964

Gil June 20, 2011 at 12:45 am

In other words “our Liberal enemies are wrong about everything’?

brotio June 20, 2011 at 3:05 am

No. Daniel Patrick Moynihan was right that privatizing Social Security would be better than what we have.

brotio June 20, 2011 at 3:06 am

DP Moynihan might have been the last honest liberal politician.

indianajim June 19, 2011 at 7:11 pm

Yep, Roger Garrison and that bunch of inland (non-”saltwater”) economists from Auburn are deaf, dumb and blind. Rumor has it that some of those good ole boys cotton to the Tea Party Patriots and you know that those people are just a bunch of rabid racist Nazi sympathizers whose only use for books is for making bonfires.


SaulOhio June 19, 2011 at 7:22 pm

This from the man who wrote “The Hangover Theory”. ROFL!

Dave Thomas June 19, 2011 at 8:42 pm

What policy prescriptions of Dr. Krugman’s achieved any success? Credibility belongs to advocates of successfully policies and Dr. Krugman simply discredits himself, the Nobel committee, and the New York Times repeatedly. It’s sad to watch this kind of self-destruction. Is Paul just another Bobby Fischer type, a flash of genius followed by a long, sad decline?

Scott June 19, 2011 at 8:54 pm

By the way, it would sure be nice to take back the label “liberal” from the left. They are NOT even remotely liberal. They are socialist and liberty haters.

PrometheeFeu June 19, 2011 at 9:02 pm

To be fair, I have some good friends who want to take back the label conservative from the right. They feel the right is reactionary.

PrometheeFeu June 19, 2011 at 8:57 pm

Wait, you mean Paul Krugman is not a well informed thoughtful economist who honestly, respectfully and productively debates those he disagrees with? I am flabbergasted.

Justin P June 19, 2011 at 9:12 pm

I am still waiting to hear a coherent answer to, What exactly is aggregate demand? It’s like dark matter, they think it’s there but can’t describe it, don’t know how to measure it and don’t know what it’s made of. Of course they thought aether was real too!

Justin P June 19, 2011 at 9:13 pm

And I’m talking about classical aether.

indianajim June 20, 2011 at 8:15 am

Think of aggregate demand as having various components like: C,I,G,and (X-M). Don’t worry too much about C, G, or (X-M); it’s I that is most like the “dark matter”. But think of it more like the “red matter” from science fiction’s Star Trek. When waning animal spirits (the red matter) is launched, the economy implodes into a black hole (just like in the film!). The only way out is for Krug, Biden, Pelosi, Reid, Bernanke and Bama (think Spock, McCoy, Scotty, O’hura,Chekov,and Kirk) to reverse the process is by injecting dollars acquired via borrowing, taxing, or printing into failing banks, car companies, construction projects, government agencies, and foreign nations (wars are good for the economy, don’t ya know).

If Krugman read this post, which he won’t since there are no non-liberal blogs that can help him, he would cite it as prima facie proof that this blog is just a bunch of knee jerkers who neither listen, nor comprehend, nor have any chance of comprehending the great insights that Lord Keynes brought down from the mountain to try to heal his heathen brethren who still believed the market for loanable funds relevant (does anyone still think thrift and private sector investment lead to growth?).

And another thing: Just how the hell are saltwater (or liberal) economists supposed to get government grants to compose central plans if they give up aggregate demand in deference to the circumstances of particular time and place?


Josh S June 20, 2011 at 2:02 pm

Aggregate demand is the sum total of all consumer spending in the economy. It’s just a measurement. Of course, it can be hard to define what exactly is and isn’t consumer spending, but for the most part, it’s pretty clear.

Grant June 19, 2011 at 9:26 pm

“I don’t know of any economics or politics sites on that side that regularly provide analysis or information I need to take seriously.”

If you do a search on Krugman’s blog for Greg Mankiw you get 39 search results of articles where he mentions something from Mankiw. If you search for Tyler Cowen you get 19 results. In fact he even links to marginal revolution on his blog. So he doesn’t consider “but I don’t know of any economics or politics sites on that side that regularly provide analysis or information I need to take seriously.”

So I guess his blog posts where he discusses things from Mankw and Cowen aren’t serious?

Grant June 19, 2011 at 9:30 pm

Also, I know this would probably never happen, but it would make for an interesting and entertaining Econ Talk podcast if Krugman was the guest.

PrometheeFeu June 19, 2011 at 10:25 pm

Honestly Grant, I doubt that would be interesting at all unless Krugman diverged widely from his usual style/attitude. Russ has a habit of challenging his guests and I think Krugman has avoided being challenged at all cost recently. He seems much more comfortable just spouting his abuse safely from home.

Daniel Kuehn June 19, 2011 at 11:16 pm

Wow – Krugman is like catnip to you guys.

I find this “didn’t distinguish between conservatives and libertarians” point interesting… a couple people have said it in response to this now.

Maybe he distinguishes them just fine, and simply didn’t think libertarians were worth mentioning…

Dan J June 20, 2011 at 12:24 am

Not just Libertarians, but any non-progressive who cannot find the value in govt expertise and expert guidance that can lead the ….. Bill Maher quote- “country of stupid f@%#s”……
It is insulting. Krugman and others should just volunteer themselves and stop looking for ways to use the thuggery of govt to force participation into their schemes.
I don’t want gyno care in my medical insuance….. I don’t need it. And It is not my problem to pay for it. If Krugman and others want to pay more taxes….. Then just write a check for whatever amount they feel necessary and shut up already.

vikingvista June 20, 2011 at 2:01 pm

It is only OTHER people who don’t pay their fair share of taxes.

Sandre June 20, 2011 at 11:33 am

DK, Boudreaux said that lack of distinction on that part of PK is unimportant to the point that Boudreaux was making. Krugman was just plain lying when he says he takes the works of conservatives seriously. Period. Can you for once stop defending him.

“Some have asked if there aren’t conservative sites I read regularly. Well, no. I will read anything I’ve been informed about that’s either interesting or revealing; but I don’t know of any economics or politics sites on that side that regularly provide analysis or information I need to take seriously.” -PK

Ryan Vann June 20, 2011 at 1:59 pm

Pretty sure DK is Krugman.

Daniel Kuehn June 20, 2011 at 3:12 pm

When did I say Krugman takes the work of conservatives seriously?

I remember when he wrote about not reading conservative blogs – I thought that demonstrated extremely poor judgement on his part. I just said I think he knows the difference between libertarians and conservatives and he just doesn’t think or talk about libertarians all that much.

Can you for once get ahold of yourself before responding to me and stop blaming me for things I’ve never said?

Sandre June 20, 2011 at 3:57 pm

DK asks…When did I say Krugman takes the work of conservatives seriously?

When did I accuse you of such a thing?

Can you for once get ahold of yourself before responding to me or other libertarian bloggers and stop finding “nuance” where none exists?

brotio June 20, 2011 at 4:51 pm

He’s gotten so good at divining Krugman’s mind, he’s sure he can divine yours, too.

Kevin R. June 19, 2011 at 11:25 pm

Is not his “liberals are intellectual and conservatives are ignorant dogmatist” mantra terribly dogmatic? I mean seriously; he’s on the pulpit preaching liberal superiority whilst claiming conservatives are the biased type? I’m sorry Mr. Krugman, but you can’t have your cake and eat it too.

jpm June 19, 2011 at 11:58 pm

I don’t know why don can criticize Krugman when he engages in the exact same taticts as K in his criticism:

“such as Glenn Beck and Rush Limbaugh…who entertain large popular audiences, you’re wrong to equate the pronouncements of conservative media stars with the knowledge and works of conservative (and libertarian) scholars.

He presents no evidence that Glenn B or Rush L are unknowledgeable.

He just presents it as fact just like the left does. I think Don does this to unjustly raise his own credibility.

Heused to it with Palin. Tells us she is unfit to lead, but can’t cite a single solitary example of her “un-fittedness”.

I find this as dishonest as Krugman.

DG Lesvic June 20, 2011 at 2:34 am

Why can’t the man just give an opinion without having to write a complete tract on the subject?

Russell Nelson June 20, 2011 at 7:42 am

She is inarticulate. She’s unfit to lead, because she CAN’T TALK. Do you need any more of a reason than that?

vikingvista June 20, 2011 at 2:03 pm

If I could train a monkey to do nothing but veto bills, that monkey would be the best President we’ve ever had.

The Presidency isn’t rocket science.

yet another Dave June 20, 2011 at 2:20 pm

vv – awesome comment. I’m stealing that one (with proper credit given, of course).

brotio June 20, 2011 at 5:00 pm


Dan J June 20, 2011 at 11:43 pm

Until you assume the role of central planner in charge. I do assume that there are thousands who pull on your strings or try to in the name of their ‘good’ or imperative causes. But, the nonsense with assuming that the president is king aside from a few obstacles, congress/judiciary/Constitution, needs to come to and end. A presidents first and foremost job as outlined by Constitutional and oath of office is to protect the Constitution. I would assume his next roles are a far secondary of final say in military expeditions and first representative to foreign states.

Scott June 21, 2011 at 8:58 am

Holy mother of God yes!

brotio June 20, 2011 at 4:59 pm

Do you need any more of a reason than that?

She speaks better than the current president, or his VP.

Her populism puts her lower on my list than other candidates, but she would be a vast improvement over Tweedle Dumb, and Tweedle Dumber, just because of her stance on ObamaCare, and a willingness to allow domestic carbon-energy production.

Scott June 21, 2011 at 9:01 am

She’d be better than bush was.

yet another Dave June 20, 2011 at 2:31 pm

Leaving out the beginning of the sentence you quote seriously distorts Don’s meaning. The comnplete sentence is: “However valid or invalid is the artistic license used by conservative celebrities such as Glenn Beck and Rush Limbaugh (and, for that matter, by “liberal” celebrities such as Rachel Maddow and Keith Olbermann) to entertain large popular audiences, you’re wrong to equate the pronouncements of conservative media stars with the knowledge and works of conservative (and libertarian) scholars.

Don “presents no evidence that Glenn B or Rush L are unknowledgeable” because he made no such claim. Not sure how you got that from his post.

Dan J June 20, 2011 at 12:13 am

I * think * only that to put talk show entertainment in the same light as those who work at CATO is propaganda. This would be like saying John Stewart and Colbert are and should be considered on equal footing as Mr. Krugman.

PrometheeFeu June 20, 2011 at 12:28 am

OK, I actually read the article, and the first thing that strikes me is that the Foundation trilogy (only the trilogy Paul? That’s kind of lazy. There are a gazillion books in that series) is his top pick for his favorite books. I personally loved it and it did inspire me to become an economist because I too wanted to be one of these guys who could predict how societies function and make the world a better place. The difference between between Krugman and I is that I eventually realized that there is no such thing as the benevolent members of the Second Foundation guiding the universe on a path of growth and happiness. No one can or should be trusted with that kind of power. Several of the stories in the series actually point to that, it seems Krugman forgot those. I at least for a couple of years had an excuse. I was going to be the Philosopher King and I was pretty sure I could trust myself with ultimate power. (I gave up on both concepts more or less simultaneously) Krugman appears to have this absurd belief that through some magical process, an enlightened leader will arise. Spoilers: It’s not going to happen.

Greg Ransom June 20, 2011 at 12:33 am

Krugman once famously claimed that Friedrich Hayek made no contribution to economics of any kind. NONE.

Krugman also wrote a famous piece “attacking” Hayek’s macro with revealed complete unfamiliarity with Hayek’s actual work & causal mechanism.

Krugman lies with every word that comes out of him, including “and” and “the”.

People just need to come to terms with it.

Krugman lies.

It’s what the man does.

Scott June 20, 2011 at 1:47 am

Krugman recently wrote an article on how medicare saves money. His proof is that medicare costs have inflated much less than private health insurance costs. He fails to mention that medicare pays only around 15% of the billed amount as mandated by maximum reibursement limits. Who picks up the slack? Fee for service patients and private health insurers.

Point being, Krugman is smart enough to know the outright lies he peddles. All he is, is a propagandist with a title.

DG Lesvic June 20, 2011 at 2:48 am


You wrote,

“Krugman once famously claimed that Friedrich Hayek made no contribution to economics of any kind. NONE.”

I dont’ know of any original contribution to the theory that he made either. That’s not to say that there weren’t any. I just don’t know what they were, and after a life time of being on the look out for them.

I believe that the idea for which he is most noted is that the market is a process of knowledge discovery. But what isn’t? The knowledge discovered by the market is that of prices, and the price system was discovered long before Hayek.

As far as I could see, his contribution was to elaborate on the ideas of more original thinkers, especially Mises.

That is not to deny his greatness and the unique role that he played, as an independent if not exactly original thinker, an almost lone, courageous voice for reason in his time, and a great communicator.

But a great original contributor to economics?

Show me.

Josh S June 20, 2011 at 2:06 pm

Coordination of distributed knowledge was an original idea. No one before him had put it quite like he did.

Greg Ransom June 20, 2011 at 12:40 am

Roger Garrison answers Krugman’s BS on Hayek:

DG Lesvic June 20, 2011 at 4:21 am


Thanx for that great link. Unfortunately, Garrison makes some serious errors, which, presumably, were those of Hayek, too.

Garrison wrote:

“None of this is to deny that a sharp increase in money demand (or a collapse in the money supply) can seriously retard recovery—as certainly happened in the 1930s.”

By money demand he means saving, and, presumably, in a mattress, removed from circulation, rather than in a bank that would lend it right out again and back into circulation.

But saving it in the mattress, so to speak, is just what is needed. In the wake of capital consumption and the face of more destructive policy, more saving, to restore the stock of capital and keep it out of the path of an oncoming avalanche or rampaging government, is just what is needed. And any “multiplier” effect of throwing it under the avalanche would be a multiplier only of the malinvestment at the root of the problem. Avoiding the avalanche is not what is retarding recovery. It is the avalanche that is doing so. Avoiding it is essential for recovery when and if the opportunity for it occurs. If it doesn’t, that isn’t the fault of the saving. Saving, in the proverbial mattress, is the effect and not the cause of the problem, and, so far as there will ever be a solution, an essential part of it.

Garrison cites Krugman asking, “[How can] bad investments in the past require the unemployment of good workers in the present?” Krugman’s implicit answer: They can’t.”

Krugman’s right. The bad investments, by themselves, would simply result in the bad investors losing their investments, while their displaced workers just moved on to other lower paying jobs, without any prolonged unemployment. For, in a contraction, by itself, it is not employment but wages that contract. Employers will still hire the cheapest labor, the unemployed, until there are no more of them. So there will still be full employment, though at lower wages, for entrepreneurs wouldn’t waste time any more than capital.

The Austrians, according to Garrison, explain unemployment during the downturn as a consequence of a lag between the destruction of capital during the malinvestment phase of the business cycle and the recreation of capital needed to reemploy the displaced workers.

But every worker was fully employed before there was any capital. They just weren’t very effectively employed. The introduction of capital didn’t transport them from unemployment to employment but simply from less to more effective employment.

So long as there is a relative undersupply of labor relative to land, every laborer will be fully employed, with or without capital goods.

That’s in a free market, without such measures as minimum wage laws.

It is not a shortage of capital or anything else in the downturn itself that causes unemployment. Then why does it occur especially during the downturn? Because the inflation during the boom period masks the unemployment effect of the preceding unemployment policy and the deflation in the downward phase exposes it.

As Mises explained:

“If in the course of…inflation the rise in wage rates lags behind the rise in the prices of commodities, institutional unemployment may shrink or disappear altogether, But what makes it shrink or disappear is precisely the fact that such an outcome is tantamount to a drop in real wages rates.”

So what is needed is not inflation to mask the effect of the preceding minimum wage and unemployment policy, but its repeal.

Garrison is one of those Keynesian Austrians I have been speaking of, advocating “monetary equilibrium,” that is, injecting money into the circulatory stream to make up for that which the market had withdrawn.

That is just more of the poison that made us sick in the first place.

If his views were those of Hayek, then Krugman was still right, though without really knowing why himself.

Ryan Vann June 20, 2011 at 2:02 pm

“By money demand he means saving, and, presumably, in a mattress, removed from circulation, rather than in a bank that would lend it right out again and back into circulation.”

By money demand, he means money demand, as evidenced that he mentions reducing money supply (both having the same affect in a money market).

DG Lesvic June 20, 2011 at 3:30 pm


If I understand you correctly, you are saying that saving money in a mattress would have the same effect as a bunch of dollar bills getting burned up or lost at sea.

Well, not exactly. Those lost dollars aren’t doing anyone any good any more, and will never come back into circulation, whereas the money saved in a mattress is still serving someone’s purpose and may still reenter circulation some day.

Ryan Vann June 20, 2011 at 10:27 pm

I’m not saying anything about saving money; you are. You completely inserted an issue that was not present in the post linked. In other words, you are off on a tangent.

DG Lesvic June 21, 2011 at 1:53 am


Again I’m not sure that I understand correctly what you’re saying but it seems to be that saving plays no part in business cycle theory. All I can say is that I don’t agree with that.

Josh S June 20, 2011 at 2:08 pm

Saving is saving whether the money is lent or stuffed in a mattress. Either way, you defer your consumption so that someone else can increase theirs. Whether this is because the bank has more money to lend or because prices fall is immaterial.

DG Lesvic June 20, 2011 at 3:34 pm


There is a difference between money saved in a mattress, or saved on a bank’s balance sheet, without getting lent out, and savings that are lent out and returned to circulation.

It is the difference between a lesser and the same amount of money in circulation, or, greater, due to fractional reserve banking.

And it is the difference between actual, physical goods being saved or consumed, and between credit being spent or saved.

vikingvista June 20, 2011 at 2:39 pm

Savings usually adds to supply. It is not demand. In a coordinated shock, unemployment in a free market is short-lived (because of the price mechanism and discretion of the unemployed), but lived nonetheless.

DG Lesvic June 20, 2011 at 3:38 pm


Yes, actual, complete saving, without the savings being lent out, “adds” to supply, in the sense that it refrains from subracting from it.

Yes, unemployment in a free market is short-lived, and, if lived, nonetheless, as you say, inconsequentially so.

Yam Slemho June 20, 2011 at 3:52 am

I applaud Don for trying to reclaim the word Liberal here. Like Hayek, I think the term libertarian is silly, and I won’t use it.

Anotherphil June 20, 2011 at 1:02 pm

Paul Krugman has all smug pretentiousness of Hannibal Lector.

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