Tuesday, December 17, 2002

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Bad economics. Oh, and more musings on Krugman

The Chicago Tribune is in the midst of a multipart series by William Neikirk on how overproduction in the manufacturing sector is leading to unemployment and potentially, deflation (click here and here and here and here for the four-part series). It would be easy to read the articles and despair of the economy ever getting on track again. The stories are well-researched -- it's clear that Neikirk talked to a lot of workers, managers, and analysts to write the story.

The problem is, the series flunks the same Economics 101 course that William Greider failed a few years ago when he published a book that stressed the same theme of overproduction and technology-related job losses. The key flaw in the Tribune series is the assumption that if jobs are being shed in key parts of the manufacturing sector due to technological innovation, this must also be taking place in the rest of the economy. Don't take my word for it, though: read Paul Krugman's evisceration of this logic when Greider first posed it five years ago.

[Ahem, you're going to use Krugman to make your point? Does this mean you take back your critique of him?--ed. Not at all, since I'm linking to one of the 90's pieces, which I praised in that post. Plus, there's something in his essay that bears repeating:

"You can't do serious economics unless you are willing to be playful. Economic theory is not a collection of dictums laid down by pompous authority figures. Mainly, it is a menagerie of thought experiments--parables, if you like--that are intended to capture the logic of economic processes in a simplified way. In the end, of course, ideas must be tested against the facts. But even to know what facts are relevant, you must play with those ideas in hypothetical settings. And I use the word 'play' advisedly: Innovative thinkers, in economics and other disciplines, often have a pronounced whimsical streak."

Krugman's right. But this applies not just to economics, but any kind of social analysis. The problem I have with his columns is that the sense of whimsy is gone, replaced with a relentless, redundant grimness that easily curdles into shrillness. But what about Krugman's poke at your link to Andrew Sullivan?--ed. I'll admit it was not the wisest link to select, but I stand by my assertion of increasing shrillness. In the Editor & Publisher piece, one newspaper editor says that Krugman "sometimes beat up too much on Bush."; The Confessore story observes, "To read through his (Krugman's) columns about Bush is to watch disdain pass through frustration into rage." If you want more proof, click here. Beyond that there's nothing to rebut -- Krugman did not respond to the substance of the post. If you want to read more on this, Jane Galt has been kind enough to host a lively discussion.]

UPDATE: Virginia Postrel has more on the importance of play as a public intellectual.

posted by Dan on 12.17.02 at 11:31 PM