Krugman on Default
By David Henderson
One of the frustrating things about reading Paul Krugman’s blog regularly, as I do, is that I so often have to cut through his nastiness to see if he’s actually saying something important and, even better, true. Why do I read him? Because he often expresses important thoughts and sometimes they’re right.
A recent instance where he’s right in important places is his October 8 post, “Default Deniers.” If you read only the title, you would probably think that he’s castigating people who think that the U.S. government can avoid a default on the federal debt and that he’s doing so because they’re wrong. After all, what does the word “denier” mean? In Krugman’s world, it usually refers to someone who denies something that is true.
But although Krugman’s tone towards those people is fairly nasty, when he gets to the actual issue, Krugman comes close to admitting an important point that many of those he criticizes have been saying: that the U.S. government, absent an increase in the debt ceiling, could prioritize payments of interest and principal to those who hold U.S. federal debt. I wrote about this here over 2 years ago. I’m not commenting on the wisdom or morality of doing so. I actually think holders of debt should be last in line because, unlike those who are owed Social Security, those who bought U.S. government bonds (and I include myself) did so voluntarily. I’m just pointing out, as Krugman almost is, that it could be done.
Where does he almost admit this point? Here’s his key paragraph:
The higher denial involves asserting that the government can prioritize, so as to avoid a default on interest payments, that this would avoid damage to the financial system, and that this means that everything will be OK. This is what you’re hearing, for example, from erstwhile respectable Republican economists, who have (surprise!) mostly fallen in line as the crisis looms. The crucial point here is that even if they’re right about interest payments–which is unclear–the government will (a) still go into default on obligations to vendors, Social Security recipients, and so on (b) be forced into spending cuts so large as to guarantee a recession if the standoff lasts any length of time.
Krugman has real trouble admitting that those whose views he dislikes have a point. So he doesn’t come out and say that they do. He, instead, does it in typical Krugman fashion.
First, he says they’re “erstwhile respectable.” “Erstwhile,” of course, means “in the past.” So could one be “erstwhile respectable” and also be currently respectable? One could. But it seems clear that he wants his careless readers to think that because these economists–oh, and by the way, they’re, ooooh, ick, yuck, Republican!–are “erstwhile respectable,” they’re not respectable now.
Second, he writes “even if they’re right about interest payments.” That opens the door to the idea that they might be right.
Third, he half closes the door by saying “which is unclear.” Why would it be unclear? Blankout, as Ayn Rand would have said. He doesn’t tell us. It’s probably because he can’t. It’s actually quite clear.
Fourth, he moves the goal posts. Whereas the original discussion had been about whether the U.S. government could pay interest and principal in full without raising the debt ceiling, Krugman redefines “default” to being not about default on the debt, but, rather to being “default on obligations to vendors, Social Security recipients, and so on.”
Krugman is a master at this. If I were trying to teach someone how to write clearly, I would use many of Krugman’s posts as examples of something to avoid. (On the other hand, I would use a large percent of his popular writing in the 1990s as a model to emulate.) However, if I wanted to teach someone how to attack a person or an idea while still not actually refuting the idea, I would use as a template many of Krugman’s posts, especially the one I’m commenting on here.