Krugman: Economic and Technological Conservative

Michael Mandel

In an economic and technological sense, Paul Krugman is a conservative (small 'c'). He likes traditional measures of the economy. And he appears not to like my latest cover story on flaws in the statistics. In today's column, Krugman writes:

Some people insist that the U.S. economy has hidden savings that official statistics fail to capture. I won't go into the technical debate about these claims, some of which resemble arguments used not long ago to justify dot-com stock prices, except to say that the more closely one looks at the facts, the less plausible the "don't worry, be happy" hypothesis looks.

I've been down this road with Paul before. In the mid-1990s, he nastily attacked both myself and BusinessWeek for suggesting that productivity growth had accelerated. In December, 1997, for example, he dismissed the idea that new technology could push the sustainable growth rate up to 3.5% or more:

The conventional view that the economy has a "speed limit" of around 2-percent to 2.5-percent does not come out of thin air...I can't bring myself to endorse a doctrine that I know to be just plain dumb."

And then in June 1998 Krugman wrote that:

The truth is that we live in an age not of extraordinary progress but of technological disappointment. And that's why the future is not what it used to be.

Oh, yes, one more thing. Krugman was wrong about the New Economy in the 1990s, and he's going to be wrong about the New Economy now.