My newest post at Conservative Home is not 2012-focused, but I thought Race42012 readers might enjoy it since I go after Paul Krugman.
As a peruser of news I force myself to read every column Paul Krugman writes in The New York Times. It’s painful, but it provides me a look into how the left views various policies and political goings-on. One constant irritant is the claim by Krugman (recycled in this blog post in late February) that massive inflation is not only not happening in America but is not a risk in the near future.
I doubt that Krugman responds to most of his critics (he has too many to count) or even pays attention to what those critics say. However, I think it would be of great benefit to his readers if Krugman would respond to the following facts impacting the American economy, and why he thinks they are not factors to be considered when talking about inflationary possibilities:
- Gas prices are up $.80 since this time last year.
- Corn and other food prices are up, in some cases substantially, since last year.
- One of the men in charge of the recovery, New York Federal Reserve President William Dudley, showed he is absolutely clueless when it comes to how prices impact poor and middle-income Americans. But who are you going to believe- Dudley and Krugman or your own lying grocery bill?
- Related, at the latter link, energy prices have jumped nearly 10% in a year, and food has jumped over 2%. The Federal Reserve ignores this because its preferred Consumer Price Index (CPI) excludes energy and food costs.
- Quantitative Easing, Part 2 (QE2) was begun in November 2010 in order to increase inflation, according to the Federal Reserve and Fed Chairman Ben Bernanke.
As I noted above, Krugman has many, many critics. I am certainly not at the top of that list in either status or fame. However, given he has been proven dead wrong before (for example, James Agresti of JustFacts.com slammed him on claims regarding government spending), it would be nice if he would respond to the five critical points raised above. Otherwise Krugman will continue to prove to most readers to the right of Howard Dean that he is simply a demagogue, not an objective analyst of economic data and economic reality.
April 4th, 2011 at 8:49 pm
Thank you for talking about this, Paul! Excellent post!
April 4th, 2011 at 8:53 pm
Krug made a new enemy today..
Driving the Conversation Krug slugs TPaw over video
| 4/4/11 8:39 PM
April 4th, 2011 at 8:56 pm
Very good post. Excellent points.
April 4th, 2011 at 10:12 pm
“and food has jumped over 2%”
Really, is “jumped” a great way to put this. Jumped? Inflation is picking up. But it is also important to put things in perspective here. Petroleum prices have been volatile for the past few years with some pretty intense spikes (some of which were passed on, others that were eaten). But prices fell dramatically as well. Similar for other commodities. But here is where it is helpful to compare with the past. Energy prices are lower in inflation adjusted terms than the 70s, plus food and energy both make up a smaller percentage of household expenditures compared to income. Not saying this is a problem, just not as serious compared to the unemployment/underemployment situation, medical inflation, and the leftover mess from the housing bubble. Most Americans just do not get worked up over inflation like those I mentioned. Heck even government spending priorities are of higher concern. Until inflation rates actually reach closer to 1970′s levels, im not convinced this is a big deal. Just something to keep an eye on.
November 12th, 2011 at 2:13 am
Googling for something somewhat related, I came across this post. I have to say, I’m not often compelled to comment on such posts (rather, I usually take them in stride…after all, whose mind am I really going to change?) However, this case seemed exceptional for its outright ignorance of even basic economic facts. To state it briefly: Krugman would never argue that prices aren’t increasing — the facts say they are (which the author points out with numbers 1 and 2). In fact, he recognizes this and has a very good explanation for it: (http://krugman.blogs.nytimes.com/2011/09/24/a-quick-note-on-inflation/). There is a distinct difference between real price increases and inflation. The former is what we experienced, the latter is not.
Skipping #3 (because I’m not sure how it relates to anything), #4 is addressed by Krugman numerous times, in addition to the link provided above. He uses alternate measures of inflation, finding similar results. He includes and excludes housing, energy, and food costs in different models and the results remain consistent and robust. It would be difficult, especially given the author’s demonstrated non-knowledge of economics to believe the facts provided, ostensibly showing rising inflation (but actually not) over Krugman, who makes every effort to address critics who fault him for not including this or that. He does, and has, addressed all of the author’s criticisms (more than once), which leads me to believe that the author is not as persistent in his reading of Krugman as he claims.
Finally, and somewhat tangentially, the link of Krugman getting “slammed”? That’s just another case where an author took something he wrote out of context and didn’t bother to see what else Krugman had to say about it. Krugman would never deny that overall government spending has risen — it has. However, there is a perfectly logical explanation for it that the author of the “slamming” post doesn’t even consider: the rise in entitlement spending for SS and medicare. Take out the rise in these two entitlement programs (because of the wave of baby boomers, of course) and government spending has indeed, as Krugman shows in detail, remained flat or decreased even WITH the stimulus package. I don’t know how else to describe both of these posts except to emphatically say “Fail.”