Garett Jones on Krugman
By David Henderson
I don’t know Garett Jones personally nearly as well as co-blogger Bryan does, but I know his work enough that I also recommended him highly as a guest blogger. Rather than discuss his work generally, I want to highlight his recent review of Paul Krugman’s book, End This Depression Now! It’s strong evidence for Bryan’s statement about “[h]is rare blend of courage and courtesy.”
By his [Krugman’s] own calculations, however, state aid would make a modest contribution, which means most of the heavy lifting must be done by the Fed and by debt relief. But he barely even attempts a persuasive case, never giving these proposals the attention he bestows on spending hikes. A better title for the book: End Teacher Layoffs Now!
If you’re comfortable with Krugman’s snark, however–and if you know he’s leaving out the best arguments of his opponents–this book is still a fun, impassioned way to catch up on recent events and key ideas. Paul Krugman doesn’t give a good clean fight, but he gives a good fight.
Especially in the first and last thirds of this book, I caught glimpses of the pre-George W. Bush Krugman, arguably the most gifted economics popularizer of his generation. He instructs us in some of the best ideas on the macroeconomics of crises (mixed with some detritus); he names his opponents and gives a hint of their ideas so Google can tell us if he’s representing them fairly (50% fair); and he repeatedly concedes real points to these opponents.
His take-down of the dour prophets of inflation alone is worth the price of admission. For years we’ve heard that because of the Fed’s loose-money policies, high inflation was inevitable. Krugman is right that inflation is likely to stay subdued, and it’s a pleasure to read him as he calls out the inflation prophets by name, and with zeal.
Worse, he doesn’t even believe in overwhelming payoffs to government spending: A dollar of government spending might only increase the private sector by fifty cents, he reports in his postscript. Once you consider that government isn’t all that efficient, that taxes will have to be raised someday to pay the bill, and that government programs tend to outlive their usefulness, this doesn’t sound like such a great idea. At best, it falls into the judgment-call category. So even if he’s right about the numbers, a huge federally funded hiring binge doesn’t sound that appealing.
This last reminded me of Kevin Murphy’s insightful take-apart of the original Obama fiscal stimulus plan.