Tuesday, January 6, 2004
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Hiss. Hiss, I say.
What could prompt Brad to say this?
I then linked to Don Luskin and Bureau of Labor Statistics data suggesting that the numbers of discouraged workers and those who work part-time for economic reasons are not unusually high.
Brad's beef is with my operationalization of what Krugman said:
Brad then presents data showing that by his operationalization of Krugman's words, the employment situation looks recession-like.
How to respond?
One way is to point out that Brad doesn't directly address the point of the post -- that Krugman's claim that this job market is unusually bad is an exaggeration. Brad's data suggests that the percentage of people not working has dropped by a fair amount since 2000 -- but it's still higher than Bush I recession levels, and way higher than Reagan recession levels. Part of this may be due to greater female participation in the work force -- and part of it may be due to the economy being in better shape than it was in 1990 or 1984. Similarly, the discrepancy between the household survey and the payroll survey -- which Brad displays in this post -- is still less now than it was in 1990. As to what explains fluctuations in this number, even DeLong confesses puzzlement.
My primary concern in the Krugman post was the word "unusual" and "the worst job market in 20 years." I wasn't saying that the employment situation was rosy -- merely that it was not as bad as Krugman asserted. The measures I used confirmed this.
Another response is to use DeLong's logic right back at him. Does Krugman say that those who have "given up looking for work" are "people who have dropped out of the labor force over the past three years"? No. Does Krugman say the words "over the past three years" at all? No. Does Krugman say that those "marginally attached" are in the category of "those who tell the BLS household survey interviewers that they are working but for whom there is no corresponding employer telling the BLS payroll survey that they have somebody working for them"? No. Does Krugman say the words "payroll survey" at all? No.
So which operationalization is correct? This depends on whether you're talking about Krugman's intent versus what Krugman has written on the page. If you go by intent, it's far more likely that DeLong knows what Krugman meant than myself. DeLong has a Ph.D. in economics -- I possess a measly M.A. DeLong is pretty tight with Krugman -- I'm not. Maybe they had an exchage where Krugman said, "Yes Brad, when I say 'marginally attached,' I'm talking about those who tell the BLS household survey interviewers that they are working but for whom there is no corresponding employer telling the BLS payroll survey that they have somebody working for them."
However, I couldn't read Krugman's mind when I wrote what I wrote. All I could do was read what he wrote. This is a danger with popular writing on economics -- plain language can be interpreted in a number of different ways. I think the operationalizations I used are valid and straightforward -- but Brad's are certainly plausible. So are Arnold Kling's, for that matter.
A final point about Brad's language -- the "screams and leaps, fangs bared" deal. This implies that I engaged in massive rhetorical overkill in my post on Krugman.
In the original post, there were no exclamation points. No ALL CAPITAL LETTER statements. No adjectives to describe Krugman. I didn't impugn his motives. Unlike Luskin, I didn't say Krugman lied -- I said I thought he was wrong, without ascribing intent. When Brad e-mailed me to say that there was another way to interpret Krugman's paragraph, I linked to his points (as soon as Blogger would permit) in an update to the original post (by the way, the term "quasi-response" was not meant to say that Brad's posts were weak, but rather that he never linked to my original post, so it wasn't a direct response. In retrospect, "indirect" might have been the better word choice).
If this is what Brad means by "screams and leaps, fangs bared," he's way more thin-skinned than I had previously thought.
You know what, I'll meet them halfway -- instead of "distortion," which does hint at intent, perhaps I should have used "error."posted by Dan on 01.06.04 at 05:43 PM
“My primary concern in the Krugman post concern was the word "unusual" and "the worst job market in 20 years." I wasn't saying that the employment situation was rosy -- merely that it was not as bad as Krugman asserted.”
Dan Drezner’s point is both fair and easily defensible. And he does indeed refuse to indulge in Donald Luskin’s unfortunate tendency to charge Paul Krugman with lying. I also prefer that a critic merely points out where the Princeton economist is supposedly wrong---and shy away from the moral judgments.
Why is Brad DeLong coming unglued? My guess is that he is a tenured professor at a very liberal university and therefore feels an incumbent need to prove how progressive he is. Needless to add, such an urge can often prove embarrassing. There’s an awkward truth that make DeLong most uncomfortable: he has far more in common with many conservative economists than he does with the left of center thinkers within the Democrat Party! Professor DeLong is a 1992 Bill Clinton follower who is rapidly becoming unwelcome in his current political home. Robert Rubin and he may very well not be able to support the eventual Democrat presidential nominee without risking being called hypocrites. I’m utterly convinced that the litmus test for the Democrat Party includes a unhesitating commitment to protectionist policies. Free traders are to be hunted down and ultimately excommunicated. Sigh, Brad DeLong’s days are numbered. Perhaps President Bush might offer him a cup of coffee and a place at his table?
Please note that our host referred briefly to Arnold Kling. This latter gentleman deserves your admiration and loyal readership. I strongly recommend his blog at http://www.arnoldkling.com/posted by: David Thomson on 01.06.04 at 05:43 PM [permalink]
"he's way more thin-skinned than I had previously thought"
You're kidding!posted by: Al on 01.06.04 at 05:43 PM [permalink]
Brad DeLong does seem to be turning into Max Sawicky or someone even more shrill and unhinged. It's too bad, I liked to visit his site even when I didn't agree with 2 out of 3 things but the tone has gotten too, well... exactly like all those other sites I don't ever visit, usually with pretentious Latin/Greek names....posted by: Mike G on 01.06.04 at 05:43 PM [permalink]
For what it's worth, although Brad is a trustworthy source when he claims to know what Krugman was thinking when he wrote the column, those are not the standard definitions of "discouraged worker" or "marginally employed."
Until I read Brad's post, I had no idea what data Krugman had in mind.
The discrepancy between the payroll and household survey is a mystery that I have discusses in several posts on my blog. It never occurred to me to interpret it as DeLong/Krugman have, as an indicator of the level of "marginal employment." It may be that, but it could be a number of other things, also.
If Krugman were writing for the economics profession, he would have to source his data more clearly and defend his interpretation more rigorously.
posted by: Arnold Kling on 01.06.04 at 05:43 PM [permalink]
Note however that Dan is essentially conceding the point that unemployment is larger than the numbers are openly reporting. The thesis that employment is significantly weaker than the indicators report is in fact then confirmed. I also dislike Krugman's hyperbole. It is not the worst labor market in 20 years. The discussion with Dan's citations have merely confirmed what was intuitively evident to myself, that the present recession wasn't as bad as the previous one, and that one not as bad as the one before that. However, this doesn't mean that the future prospects of the economy are necessarily all roses, and the problems facing the USA of outsourcing, globalization, trade balance, restructuring the economy are far from trivial and far from being even beginning to be address by GWB's Admin. Here Krugman is hitting on all cylinders as far as prescience goes.posted by: OIdman on 01.06.04 at 05:43 PM [permalink]
Brad is subject to fits of intemperate, uncivil rage, as a review of his blog shows all too readily.
I put it down to the pervasive Bay Area resident's frustration with the rest of the country for, inexplicably, not voting like them.posted by: JK on 01.06.04 at 05:43 PM [permalink]
" What could prompt Brad to say this?"
Uh, because it's true?
I read your column. It was disgusting. Donald Luskin has a proven track record of just making shit up, and for you to buy it is pretty sad.
Of course, your credibility is enhanced by the SNL reference, a bastion of objective information!
Truly pathetic.posted by: Joey Giraud on 01.06.04 at 05:43 PM [permalink]
Joey, please. Dan was very reasonable in his response. He has the right to his opinion much as you to yours.
Luskin is frequently over the top in many ways but his analysis is usually sound on krugman. He's not the only one to take Krugman to task. A lot of other have and they do seem to have coherent arguments. Krugman, in much the same way as Chomsky uses his expertise in one area to comment in others. I think he is spreading himself a little too thin. His recent columns have sounded quite shrill.posted by: capt joe on 01.06.04 at 05:43 PM [permalink]
Dan, you didn't understand the points made by Krugman.
Krugman Second point: Other job-market indicators, such as length of joblessness, indicate the worse job market in 20 years. Note Krugman is not including the employment number in this.
Read more carefully next time, especially outside your expertise.posted by: CalDem on 01.06.04 at 05:43 PM [permalink]
Krugman is full of shit and you called him on it. For that, and doing it with civility, congratulations. However, what did you expect from his defenders? This is essentially the upscale Michael Moore/ Al Franken crowd you're dealing with. That you would get a tantrum out of DeLong is to be expected. I'm just surprised he didn't channel Franken and challenge you to a fist fight in some parking lot.
Krugman is a talented economist, but as a public intellectual he is basically Moore with a full beard and acceptable hygiene. His column is simply another indication of why the New York Times and the Anyone But Bush crowd can't be taken seriously. I took an economics degree 24 years ago, and the whole agrument of what constitutes a reliable unemployment figure was too old to be an interesting controversy then. That Krugman would drag out this old war horse to feed his obsessive hatred of all things Bush says far more about him that the economy.posted by: DennisThePeasant on 01.06.04 at 05:43 PM [permalink]
Brad Delong is an economist? Why does he know so little about data?
The household and payroll surveys, as the BLS says repeatedly on its website, are very different and not comparable. The household survey includes domestic household workers (and some workers in family businesses) that the payroll survey does not. More importantly, the household survey includes self-employed workers, a rapidly growing category in recent years, while the payroll survey doesn't.
As a number of analysts have pointed out over the last year,a widening gap between the household and payroll surveys is usually a sign of an impending turnaround. The theory being that new businesses and their new hiring show up immediately in the household survey (which asks people if they have jobs) but only shows up later in the payroll survey once the BLS finds the firms and surveys them.
In short, the gap is a good thing, not a bad one.posted by: GP on 01.06.04 at 05:43 PM [permalink]
The "scream and leap" bit comes from Larry Niven, and is something of an honor:
I found your challenge verbose. In challenging a kzin, a simple scream of rage is sufficient. You scream and you leap.
Hail, noble warrior!posted by: Pixy Misa on 01.06.04 at 05:43 PM [permalink]
Note: I am not an econonmist, nor do I play one on TV. However, perhaps the disconnect in the total employment numbers, population numbers and unemployment rates are due to people retiring. Several of my coworkers have retired in the last two years - they were smart enough to ride the Clinton bubble up and move to conservative invenstments as the market peaked and fell. Several are self employed so that they can work as much as they want. The bleeding edge of the baby boomers are almost 60.posted by: Edmund Hack on 01.06.04 at 05:43 PM [permalink]
"Several of my coworkers have retired in the last two years - they were smart enough to ride the Clinton bubble up and move to conservative invenstments as the market peaked and fell. Several are self employed so that they can work as much as they want. The bleeding edge of the baby boomers are almost 60."
I can vouch for this. One of my best friends is similarly "unemployed". Lost his job during the tech collapse, independantly wealthy as a result of the previous tech explosion, so "retired". Age 34.
Caldem: "The Krugman article said that the number of discouraged workers was unusually high. "
Uh uh uh Caldem, DeLong specifically said that Krugman wasn't talking about discouraged workers, at least not as we know them:
DeLong: When Krugman writes "an unusually large number of people have given up looking for work" he is tracking the flow of people who used to be employed into out-of-the-labor force status, and is referring to a much larger category of people who have dropped out of the labor force over the past three years than just the Bureau of Labor Statistics's "Discouraged Workers" category.
Which is just as well, as the number of discouraged workers is most definitely not "unusually high". So far DeLong has not shared with us exactly how Krugman's "unusually high" statistic is derived, but I'm sure he will, one day.posted by: dc on 01.06.04 at 05:43 PM [permalink]
How about just using the employment-population ratio? It avoids the mess of whether people are in the labor force or not (though it doesn't say anything about the disparity in the household and payroll surveys).
Paste this into your browser and choose the start year you like best...
posted by: RD on 01.06.04 at 05:43 PM [permalink]
Brad DeLong = Brad Dingdong.posted by: Buster on 01.06.04 at 05:43 PM [permalink]
Just wondering how many of you out there have been unemployed or looking for a new job?
I'm a recent university graduate with a degree in computer science. I have experience. I have great business references. I'm willing to work at dirt farmer's wages.
The job market is very discouraging, especially in the high tech sector. I've been offered temporary part time work. Most of my friends have accepted work as telephone support or as bank tellers. (These are people with degrees, mind you.)
I realize that my experience isn't representative of the entire job market, and I'm not looking for tears of sympathy. But some of these stories about an anemic job market are accurate. I live in a somewhat "high tech" city (Austin, TX), and the hunt for a job in that sector of the market is tougher than expected. It's discouraging, because companies are looking for long-term part-time employees or temporary employees. They don't want to provide benefits, but they don't want you to have the time to go work elsewhere. Skilled workers are being asked to answer telephones all day or examine widgets on a process line.
For some of us looking for meaningful employment, the market is tight. I'm aware that times are always tough for the unemployed. However, I took a three-year break from school in 1997. Within three days I found a good office job that I held until I returned to school, and I received full benefits at a surprisingly good wage (for somebody with a high school diploma). Compared with my current seven-month job search, it was a piece of cake.
Some of us ARE unusually discouraged right now.
The key issue with Krugman is that he cloaks himself in his academic credentials and then writes columns that deliberately obscure the real data, deliberately invent new terms that have no statistical support to avoid the old terms with huge collections of statistics that just happen to not support his claim. Dan and Luskin capture that here. DeLong's "rebuttal" is more amusing in that while phrased as a rebuttal, it does more to support the key issue with Krugman.posted by: Robin Roberts on 01.06.04 at 05:43 PM [permalink]
The unemployment level is pretty much the last economic indicator that has not taken off for the stratosphere in the past couple of months, and the left is clinging to it like a man hanging onto a thin, cracking branch over a thousand-foot cliff. I think this explains why they are bending every employment statistic into Mobius shapes to try and preserve this one possible failure of the Bush economy. Hmmm..."Bush Economy." Haven't heard that term in a while.posted by: tbrosz on 01.06.04 at 05:43 PM [permalink]
Frugal Liberal: I'm in the high-tech sector myself and have been for over 20 years. I've been laid off three times in the last three years, so I agree with you on the pain issue. One thing though is clear: the party's over. There is structural change occurring in the economy right now and it is occurring so fast that it is almost too fast for the human mind to comtemplate. Structural change is never pretty or pleasant for those to whom it is happening. The high-tech job market is moribund and will only get worse. Why? Moore's Law. The jobs which couldn't be moved to India in 1980, when I first learned Unix, because computers were so expensive and could only be bought by Americans, are being moved there in droves now. And there's nothing you, I, Dean, or Krugman can do to stop this. I'm sorry, but you got a degree in the wrong field at the wrong time. Why not study buggy-whip making? The breath-taking structural change occurring in the computer industry is the interesting economic story, one which can never be captured by a superficial reading of any of the statistics and one for which the facile and childish political attacks are completely irrelevant. Krugman has a point, but he's missing the real point. Ditto for his critics.posted by: WichitaBoy on 01.06.04 at 05:43 PM [permalink]
I used to read Delong regularly, until his site increasingly became an outlet for the Professor's ad hominem foamings; sort of an Democratic Ann Coulter with an econ doctorate. Kind of describes Krugman as well.posted by: Will Allen on 01.06.04 at 05:43 PM [permalink]
"job market is unusually bad" vs. "percentage of people not working had dropped by a fair amount."
Dresner: unemployment figures are less than rosy but historically not too bad.
DeLong: Dresner is guilty of over-the-top strawmanship.
FAIR & BALANCED: YOU DECIDE.
Is this Helpful--the energy spent on buttressing the 2 warring factions?
Isn't it ironic the techies are now worried about their own jobs.
Their technology put many out of work, for example the Banking sector needs far less employees now.
Excel and Lotus must have killed a lot of book-keepers.
Then the internet that they themselves created makes it possible for their own jobs to be sourced to India.
Too much of a good thing.
Also, to the Frigal Liberal: answering phones and inspecting widgets are normal jobs...I'm VP of sales at my company and I still inspect product on occasion and work the phones. It's fun!posted by: Aaron on 01.06.04 at 05:43 PM [permalink]
by the way, during the 1990s, there was a fairly long debate in the UK among official govt. statisticians about the most accurate measures of labour force participation. I spent a fair amount of my time as a then economics correspondent in tracking all of this. By that experience, Dan's response to deLong struck me as pretty fair and temperate.
Some of the Krugman-bashing out there is a bit over the top, but on the whole I find it amazing to see deLong getting so heated. What's the problem with the Bush-haters? They should all go a collective session with a shrink.posted by: Johnathan Pearce on 01.06.04 at 05:43 PM [permalink]
Frugal Liberal: If you are willing to work for government contractors (some folks seem to have a "moral" aversion to actually participating in making government work better), many of them are hiring to upgrade federal, state, and local government information systems infrastructure. The corporation I work for has several dozen (if not a few hundred) jobs available that require computer science or engineering degrees. Send me an email if you'd like.posted by: Jem on 01.06.04 at 05:43 PM [permalink]
I'm a physicist with little expertise in economics, so I can't comment on the technical issues involved. But, in my opinion, anyone who could compare the Dixie Chicks incident to Kristallnacht, as Krugman did, has forever sacrificed his objectivity on the altar of extreme partisanship.posted by: MELK on 01.06.04 at 05:43 PM [permalink]
A guy says he's employed but there's no employer who has him on the payroll? Did I get that right? How could that be? I mean, besides the huge number of off-the-books jobs, I mean. Besides that.
And why would workers leaving the workforce inherently signify a bad economy? I know at least a dozen women who quit their jobs to stay at home with new babies. Would they be counted as "discouraged"? They look pretty upbeat to me.posted by: spongeworthy on 01.06.04 at 05:43 PM [permalink]
This post just proves the theory that if you laid all the worlds economists end to end, you still couldnt reach a conclusion.posted by: Joel Mackey on 01.06.04 at 05:43 PM [permalink]
Krugman is much clearer about his definition than Drezner makes it appear to be. It is very obvious that he is talking about the discrepancy between trends in the unemployment rate and the ratio of employed people of the potential labor force. Sorry Dan, but I really don't see how to interpret his differently.posted by: zaoem on 01.06.04 at 05:43 PM [permalink]
“It is very obvious that he is talking about the discrepancy between trends in the unemployment rate and the ratio of employed people of the potential labor force. Sorry Dan, but I really don't see how to interpret his differently.”
Maybe this will help:
“An unusually large number of people have given up looking for work, so they are no longer counted as unemployed” – Paul Krugman
discouraged workers: People who are willing and able to engage in productive activities, but due to their overwhelming lack of success have stopped seeking employment.
The proper response to DeLong's amplification of Krugman is: So what? There's no theoretical reason that the unemployment rate should have a stable relationship to the employment-population ratio. On the contrary there is a reason the BLS distinguishes between “employment-population ratio” and “discouraged workers”, namely that people can not be in the labor force for reasons other than being discouraged.
Looks like Neal Starkman has figured out Bush supporters like me - we're stupid:
Krugman (and DeLong) are in academia, hence confronted on a daily basis by dozens of people--earnest, smart, well-educated--who would like full-time jobs but have to settle for piecework at low wages. They have students graduating to uncertain futures. They feel bad. They feel angry. Rightly so.
But how is the government going to guarantee these people full-time jobs in their chosen profession (note: the tanking of the higher ed. job market occurred in the "booming" Clinton 90s)? Answer: it cannot.
Add to the problem the particular dilemma of the two career couple (and here I'm extending my reach outside of academia to the "real world"). He has a good job in city A, she lives/works in city B, can't find equivalent job in city A; what is a couple to do? Here is where the statistic about "workers who would like to work full time but CAN'T FIND job" becomes blurry. I know lots and lots of professional couples who have to choose: live together (where one or both must compromise--work part-time, switch career, even sacrifice career) or see each other every other weekend? Again, can the government "fix" this? No. So the statistics will reflect this problem which is structural and seemingly without a policy-oriented solution.
Krugman's problem is that he is such an obscene scaremonger that nothing he says (even when it is right) can be taken at face value anymore. THis is too bad. I used to like the guy.posted by: Kelli on 01.06.04 at 05:43 PM [permalink]
GAH: It is NOT about a theoretical relationship. There are indeed a variety of reasons other than a weak labor market the trends in these ratios may be different (including the introduction of women into the labor force), but none of them appears very plausible. Moreover, Krugman actually explicitly mentions some additional measures that lend to support to the weak labor market thesis: "Such measures as the length of time it takes laid-off workers to get new jobs continue to indicate the worst job market in 20 years..." Drezner refers to the 20 year figure, but ignores this specific measure.posted by: zaoem on 01.06.04 at 05:43 PM [permalink]
I was talking about DeLong’s argument. If there is no theoretical basis to think that the unemployment rate has a stable relationship with the employment-population ratio then his argument is junk. His rationale for an unusual recovery relies on an empirical relationship between the unemployment rate and the employment-pop ratio, structural changes in the economy, changes in teh demographic composition of the workforce make any purely empirical relationship problematical, to say the least.
Plus DeLong ignores level effects, the employment-population ratio is very high from a historical pov. This is explained by the greater participation of women, sure. But I think 64% was simply unsustainable, we were below the natural rate of unemployment when the emp-pop ratio was that high and we won’t see it that high again in the near future.
“Moreover, Krugman actually explicitly mentions some additional measures that lend to support to the weak labor market thesis”
Yes, using "error" would have been better. Better yet would be to have conceded, once it was pointed out, that there was no error, either, merely a difference of opinion about how to interpret some data, in a field in which the person whom you criticized and the person now criticizing you are credentialled experts and you are an amateur.
It could still be the case that you're right and they're wrong -- "the race is not to the swift," etc. -- but it's not really very likely. You are entitled to quote this back to me the next time we disagree over foreign policy.
Markposted by: Mark Kleiman on 01.06.04 at 05:43 PM [permalink]
Furthering Mark's point, if there are two possible interpretations and one of them is correct, "error" wouldn't even be the right description. "Potential ambiguity" would be closer to what you've described...
From David T "Why is Brad DeLong coming unglued? My guess is that he is a tenured professor at a very liberal university and therefore feels an incumbent need to prove how progressive he is."
"I’m utterly convinced that the litmus test for the Democrat Party includes a unhesitating commitment to protectionist policies. Free traders are to be hunted down and ultimately excommunicated. "
Wuposted by: Carleton Wu on 01.06.04 at 05:43 PM [permalink]
Drezner writes: "No adjectives to describe Krugman. I didn't impugn his motives. Unlike Luskin, I didn't say Krugman lied -- I said I thought he was wrong, without ascribing intent."
Bull. You claimed he was distorting the numbers, you now weasel off by saying that you should have said "error", but that's not what you wrote. Your original article still characteriszes DeLong's post as a "quasi-response". No amount of toadying about how shrill Krugman is from your amen corner here can disguise the fact that your wrote like a hack and you're continuing to respond like one.posted by: Rich Puchalsky on 01.06.04 at 05:43 PM [permalink]
Some truly great commentary on both sides here. What this reminds me is of an old underhanded debate tactic. While making a point, out of contempt or as a red herring one insults or impugns the other person. Then the debate rapidly degenerates into an open bickering match, or else the arguments become charged with animus and no one is willing to concede any fault. Divorced or about to be divorced couples do it all the time. The real issues like truth or collective justice like the kids usually then get lost in the mix or torn to peices. The only rational use of 'ad hominem' is either if one trying to actively provoke this sort of thing or one is directly trying to discredit a person. If one is in search of truth or justice, it's a very bad way to go about things. Sometimes adversarial contests do not reveal truth so much as gaps of goodwill.posted by: Oldman on 01.06.04 at 05:43 PM [permalink]
Dear all again,
Let's try to take a step back and get a big picture view on all sides shall we? I think we can all agree that formal unemployment underestimates the number of people that are ready and willing to work but have no opportunity. The "real" unemployment however isn't nominally as bad as it was in the 90's, and that wasn't as bad as in the 80's. For those out of work however, they often have been out of work for a very long time.
This is because the economy is undergoing a precipitous structural change. Despite the upbeatness of Catherine Mann's economic article cited by Dan Drezner in his blog, a growth of a few paltry percentage points in IT that doesn't even match inflation much less smoking hot GDP isn't cause for relief. It is the statistical sign of foreign outsourcing of formerly domestic jobs. The fields hardest hit are the ones with still a backlog of current or up-and-coming trained personnel but the greatest globalization transfer impact.
The economic recovery is not robust, with labor not just wobbly in manufacturing but flat in service as well. Whatever jobs are replacing some (but not all) of those lost to globalization are often lower benefit, pay, and status service oriented jobs. This is supported by how wages have not risen even as productivity has, as well as the slow jobs growth number compared to extremely hot GDP.
Krugman et al. are in fact over-reaching, and therefore damaging their credibility by this. Their likely motivation is that they feel that GWB is mismanaging the current economic modernization, and more importantly preparing the USA for a castatrophic economic shock in the long term. However, the economic shock will not be felt for many years and it is frustrating in order to try to make long term impact arguments on most people who don't know that much about the economy and have an extremely short window of forward planning. Even Wall Street doesn't look much more than a few months ahead of time.
Out of understandable frustration, Krugman et al. have tried to tar GWB for what anyone rational would call a cyclical recession and structral economic modernization. This has bit them in the ass, because of heavy Central Bank, Federal, and Treasury stimulus the economy has come back - but by all the numbers is still not steady on its feet much less running full speed.
That about caps the 'big picture'. Let me know if you disagree. Ta ta.posted by: Oldman on 01.06.04 at 05:43 PM [permalink]
On a scale of 1 (low) to 10 (high) how strongly do people on this site agree with this statement on the state of our economy:
"I don't know how but I have to believe that this is America and some how we will see our way through."
If your answer is 9 or 10, Paul Krugmans project is directed against you. (Perhaps the best criticism is that this project is directed against and not for you but we must often separate the wheat from the chaff in life right?)
Despite our centrality to the world economy, America's entitlement to prosperity should not be taken for granted. Krugman's beef is that Bush's policies expose the nation to known risks over the next couple decades with the consequence that we will lose both our centrality and a substantial part of our prosperity.
In effect, Bush (and now the Fed in my opinion) is far too eager to roll the dice. If he has faith that this Nation is graced in some way that would explain it but such behavior is not often rewarded economically.
OK, Perhaps we will grow our way out of the crisis that awaits us ten years from now when the boomers retire but it would be nice if our leaders could even get their bets right. Are they Keynsians or supply-siders.
As Krugman and Delong point out they talk (and gamble)like supply-siders and they spend like Keynsians. That may work but it must take some new kind of supply-sider to actually think it will.
If you claim to be a supply-sider follow these indicators over the next six months.
1)Dollar versus Euro
Currently the picture is confusing to say the least and in my opinion a confused gambler is a bad gambler.
On the whole, the situation is a bit scary. The glue here is that our debt is still good around the world. I've even heard it said that our debt is the new gold. (That is like saying our word is gold.) Basically we are selling the world promises that we will always pay our bills - and we think the world believes us. I fear that the truth is that the global investment community is just is too frightened to imagine the consequences of not believing us. Sounds like the dot-com boom to me.
If anyone here believes in capitalism they should agree that sooner or later impartial market forces catch up. Being America will not save us forever. As several multinational behemoths recently found out, even elephants get eaten by hyenas sometimes.
If we are smart we will remove some of our bets from the table and get fiscal and monetary policy back in line. If we are just lucky we are going to take a hit and our grand kids will spend a lot of time talking about the zenith in American power at the end of the 20th Century. If we are unlucky... well lets not go there.
I'd prefer if my Country played it smart. A little short term pain intelligently distributed could pay off here. Shrill or not, I think that is the heart of what Krugman is getting at. I have yet to find a Conservative who is even capable of contemplating the brewing mess. It truly idiotic to debate the proper definition of “discouraged worker” when the plain fact is your work-force is not even close to growing fast enough. I admire people's faith but that isn't going to be enough.posted by: Michael Carroll on 01.06.04 at 05:43 PM [permalink]
Apparently my basic stream of thought was presaged more accurately, elequently and rigorously by Edward Hugh at Bonoboland
LOOK FOR: "Ben Bernake: Oh That Speech!"
"Krugman has a point, but he's missing the real point. Ditto for his critics."
If you're talking about the increasing portability of knowledge-based work with increased IT infrastructure, Krugman pointed it out back in ohhh...1995, when Bob Reich was enthusing about "symbolic analysts" as the growth sector of the labor market.
As for Dave Thomson's predictions of Brad DeLong's marginalisation, well, Dave is fabluously work on most issues.posted by: Tom on 01.06.04 at 05:43 PM [permalink]
“Does he really think that Brad's professional associates are monitoring his blog for the proper number of PC rebuttals of attacks on liberal positions?”
People on a gut level wish to be on the same page with their associates. After all, those who get along usually go along. It is a very human thing to do, and it is rare to find someone willing to rock the boat. Brad DeLong is almost certainly more conservative economically than the majority on the faculty of Berkeley. We should never forget that this particular academic community is predominantly comprised of stark raving liberal crazies.
You obviously are not a careful reader. I’ve already pointed out that the Bill Clinton of 1992 would have zilch chance of winning his party’s nomination in 2004. The Stanley Greenbergs and Ruy Teixerias have successfully convinced the Democrat activists that catering to white blue collars afraid of global competition is a winning formula. Have you, for instance, been paying attention to the recent elections in Louisiana for U.S. Senator and governor?
“As for Dave Thomson's predictions of Brad DeLong's marginalisation, well, Dave is fabluously work on most issues.”
I will throw the question back to you. Which Democrat candidates--who have a realistic chance of capturing the nomination--- share the economic views of Brad DeLong and Robert Rubin?posted by: David Thomson on 01.06.04 at 05:43 PM [permalink]
JK says: "Brad is subject to fits of intemperate, uncivil rage, as a review of his blog shows all too readily."
And, JK is right. It's sad, really. I'm a liberal, and I used to value Brad's blog quite a bit (when I could understand it, of course - I've got a much better grasp on micro than macro, which is a real limitation on his page). But in recent months, Brad's on-site personality has become noticeably pungent and intemperate.
It's sad, really. I wonder if it's the result of reading too many blogs. Someone somewhere said that the only reliable way to get attention on the web was to raise the emotional temperature, which I am starting to think is right. If that's true, then the internet may not have the democracy-enhancing effects some have hoped for. It'll just polarize us all the more. Let's hope not.
For what it's worth, Dan, I read your blog because it's thoughtful. Often I disagree, but even when I do I infallibly learn something.
Here's hoping the internet's law of thermodynamics doesn't ever get you.posted by: TedL on 01.06.04 at 05:43 PM [permalink]
"I will throw the question back to you. Which Democrat candidates--who have a realistic chance of capturing the nomination--- share the economic views of Brad DeLong and Robert Rubin?"
And for the record the Economics Department at Berkeley has been pretty mainstream for a long time although there are exceptions everywhere.posted by: Micahel Carroll on 01.06.04 at 05:43 PM [permalink]
I'm going to look at how Vermont was run when Howard Dean runs for mayor of my hometown ... although Dean might not be qualified as mayor there as the city budget is probably larger than the state of Vermont's.posted by: Robin Roberts on 01.06.04 at 05:43 PM [permalink]
Wichita Boy: that is such a good comment. It's one of the best things I've read in months. Where can I read more stuff of yours?posted by: Arnold Kling on 01.06.04 at 05:43 PM [permalink]
Nice defense of speaking-without-knowing. At least your in the majority around here.posted by: Michael Carroll on 01.06.04 at 05:43 PM [permalink]
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