Morning Must-Read: Paul Krugman: Why Having a Technocratic Dialogue These Days Is Very, Very Difficult

Paul Krugman: Stupidity in Economic Discourse: “Jonathan Gruber is mad as hell… is not going to take it anymore… is annoyed at Casey Mulligan’s latest, which misrepresents Gruber’s views; mine too.

Gruber is right to be mad: that was a disgraceful, deceptive column. But I think you also want to put it into a larger picture: the enduring myth of the stupid progressive economist…. As Gruber documents, [Mulligan] pulls multiple fast ones, asserting things that he says are conclusions of the CBO report when they aren’t–they’re his own views, pulled out of, um, thin air, or maybe someplace else, which he is projecting onto the budget office…. Mulligan tells his readers that both Gruber and I are too dumb or craven to admit that the disincentives to work created by some aspects of the Affordable Care Act impose economic costs. One suspects that Mulligan didn’t actually read either of the pieces he links to. If he had, he would have found this from Gruber: “But the likelihood of voluntary reductions in work is not the only issue. The CBO also projects work reduction by individuals who cut back on hours or avoid moving up the job ladder because they don’t want to lose Medicaid eligibility, or because they don’t want to make so much in wages that they would lose tax credits to help pay insurance premiums. Unlike voluntary job leaving, this second kind of work reduction would entail real economic distortions and be a cost, not a benefit.”

And this from me: “Just to be clear, the predicted long-run fall in working hours isn’t entirely a good thing. Workers who choose to spend more time with their families will gain, but they’ll also impose some burden on the rest of society, for example, by paying less in payroll and income taxes.”… So both of us acknowledge that there are incentive effects and that they have a cost; but both of us argue on quantitative grounds that the cost isn’t large. Hardly the doctrinaire liberalism Mulligan thinks he sees.

Oh, and bonus misrepresentation: Mulligan: “Paul Krugman goes even further and calls it ‘misrepresentations’ to interpret the marginal tax rate provisions of the Affordable Care Act as destructive. No, I didn’t — I called talk about “2 million jobs destroyed” a misrepresentation, because it is. Who says so? The CBO itself….

What one sees in this particular Mulligan piece is something I encounter all the time, in many contexts: the myth of the stupid progressive economist…. Conservative economists… have a very narrow vision of what economics is all about — namely supply, demand, and incentives. Anything that interferes with the sacred functioning of markets or reduces the incentive to produce must be a bad thing; any time a progressive economist supports policies that don’t fit neatly into this orthodoxy, it must be because he doesn’t understand Econ 101. And conservative economists are so sure of this that they can’t be bothered to actually read what the progressives write…. Many conservatives seem utterly unable to take on board the notion that people like Jon Gruber or yours truly might understand Econ 101, but also believe with good reason that you need to go beyond that point….

I’ve encountered similar responses on many other issues. You say that deficit spending is helpful in a depressed economy? You must be saying that deficits and bigger government are always good, which is stupid hahaha. You say that increasing unemployment benefits in a demand-constrained economy can create jobs? But you also said once upon a time that unemployment insurance can raise the natural rate of unemployment, so you’re stupid hahaha. Well, somebody’s being stupid, anyway.

I can’t resist going back to the 2009 debate over stimulus, when one after another, prominent conservative economists… reinvented classic conceptual errors from 80 years ago and added a few new howlers too; yet their faith in the proposition that progressive economists must be idiots never wavered.

February 14, 2014

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