A Little More on Krugman

Clive Crook is a Bloomberg View columnist and writes editorials on economics, finance and politics. He was chief Washington commentator for the Financial Times, a correspondent and editor for the Economist and a senior editor at the Atlantic. He previously served as an official in the British finance ministry and the Government Economic Service.
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In a column last week I criticized Paul Krugman's apparent belief that people who disagree with him -- let's say about half the country -- are knaves, fools or sociopaths. I said his disdain was not just absurd but also politically counterproductive. Krugman responded to my "screed," as he called it. His main point was that the disagreement over fiscal stimulus isn't really a political disagreement at all. On one side, you have people who accept some simple, uncontested facts; and on the other, you have people too knavish, stupid or sociopathic to understand when those facts are patiently explained to them.

In particular, he argued, the debate over the fiscal stimulus has nothing to do with the proper scale and scope of government -- an issue on which he seems to concede (somewhat to my surprise) that reasonable people may disagree. Whatever you think about the proper scale and scope of government, he says, you should be willing to go for a big fiscal stimulus when interest rates are at zero and demand is lacking. This has nothing to do with values or ideologies.

Actually, I agree with that -- but it's stunningly disingenuous of Krugman and other progressives to take this line. Along with small-government extremists on the Republican side, Krugman and his admirers were at the forefront in casting discussion of the stimulus in left vs. right terms. For many Democrats, the top priority in the fiscal-policy discussion was not, in fact, to make the stimulus bigger but to reverse the Bush high-income tax cuts and to make sure that the composition of the stimulus, whatever its size, as far as possible favored higher spending over lower taxes.

I don't deny there's an intelligent macroeconomic rationale for this -- theory and evidence suggest that the spending multiplier is higher than the tax-cuts multiplier. If you had to choose one or the other, from a stimulus point of view, you should prefer extra spending. But, the point is, you don't have to choose one or the other. An apolitical Keynesian would want as much of both as possible. We can't know the counterfactual, but I think the stimulus would have been bigger and more sustained if the Republicans hadn't been so reflexively anti-government (obviously) but also if the Democrats hadn't been so fixated on undoing Bush's tax cuts and making the larger case for government activism.

In any event, the main point is that the composition of the stimulus dominated the discussion throughout, as Krugman insisted it should. That put divisive value judgements about the size and scope of government at the center of the quarrel. Not everything is political, as Krugman rightly says. But the stimulus debate was as political as it gets, and, in no small part, that was thanks to Krugman.

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To contact the author on this story:
Clive Crook at ccrook5@bloomberg.net