The Krugman Recipe for Depression
30th November 2008
Amity Schlaes gives Krugman some noogies.
Here’s the meat:
Mr. Krugman is a new Nobel Laureate, teaches at Princeton University and writes a column for a nationally prominent newspaper. So what he says is believed to be objective by many people, even when it isn’t. But the larger reason we should care about the 1930s employment record is that the cure Roosevelt offered, the New Deal, is on everyone else’s mind as well. In a recent “60 Minutes” interview, President-elect Barack Obama said, “keep in mind that 1932, 1933, the unemployment rate was 25%, inching up to 30%.”
The New Deal is Mr. Obama’s context for the giant infrastructure plan his new team is developing. If he proposes FDR-style recovery programs, then it is useful to establish whether those original programs actually brought recovery. The answer is, they didn’t. New Deal spending provided jobs but did not get the country back to where it was before.
And here’s the moral: Even somebody who has impeccable Establishment credentials can be demonstrably wrong in pursuit of a political agenda. This is why it’s important not to just believe somebody because they have a lot of tickets punched, but to make them show you the numbers, and be able to explain them in terms a non-specialist can understand. “Trust me, I’m an expert” is the worst of all bases for public policy.