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Krugman: You Can't Prove My Plan Is a Bad Idea
Bob Murphy:
As always, I am stunned by Krugman's latest blog post . Check this out, and note that this is his entire post:
Readers have been correcting me for saying “niggling nabobs of negativism” in this post. Yes, I know the original (written by my former colleague William Safire.) But “niggling” is better for the current situation.
Here’s how I see it: the opponents of a strong stimulus plan don’t really have an alternative to offer. They don’t even have a really coherent critique; as Brad DeLong points out, if you believe that a surge in private spending would raise employment — and even the critics agree on that — it’s very hard to explain why a surge of public spending wouldn’t have the same effect.
The critics are instead mainly engaged in a series of minor complaints, aka niggles; FDR didn’t do so well, the statistical evidence ain’t so great, you can’t trust government, etc., etc..
So niggling nabobs it is.
Do you understand how crazy this is? To give context, Tyler Cowen has been repeatedly arguing lately that proponents of stimulus have not made the case that it has ever actually, you know, WORKED. That's what Krugman means by "FDR didn't do so well, the statistical evidence ain't so great, etc."
Notice that the two biggest case histories to "prove" the need for a huge stimulus right now, ARE EXAMPLES WHEN HUGE GOVERNMENT STIMULUS EFFORTS WENT HAND-IN-HAND WITH ECONOMIC DISASTER. Everyone got that? Clearly FDR was more of a Krugmanite than, say, Warren Harding or Calvin Coolidge, and yet the depression under FDR was much much worse than any previous one.
By the same token, what the Japanese tried in the 1990s was far from libertarian liquidationism, and it went hand-in-hand with the "lost decade."
Now Krugman et al. have responses here. E.g. both Hoover and FDR idiotically raised taxes during the 1930s, so it wasn't textbook Keynesian fiscal stimulus. And Japan didn't credibly promise large price inflation (to get adequate negative real interest rates) as Krugman recommended, so his prescriptions weren't fully tried.
But Tyler's point (and I'm paraphrasing) is that Krugman et al. are just excusing apparent FAILURES of pump priming to kickstart the economy out of recession. OK fine, so give us one good example WHERE IT ACTUALLY WORKED.
