Wednesday, April 24, 2013

Krugman Morphs into KrugTron!

(Graphics courtesy of Noah Smith)

This is some pretty wonkish economic commentary, but it's so much fun I wanted to share it with you.

Paul Krugman, my favorite economist -- partly because like Noah Smith, he writes with panache and clarity -- has been right more times than the mob of econ hacks that have driven, unfortunately, most of the austerity and deficit hawkery that have ruled our politics.

Smith has come up with a delightful metaphor for why Krugman has been right and the austerity crowd so wrong, and it's a good intro into this debate if you haven't looked into it. Here's a taste to whet your appetite:
If you grew up in the 80s you probably remember Voltron. Although the show often had convoluted plotlines, it would somehow always end with Voltron (a super-powerful robot formed from five mechanical lions) facing off against a monster called a "Robeast". Voltron had plenty of weapons, but he would invariably strike the killing blow with his "Blazing Sword". Eventually the show became kind of routine, but to a four-year-old, it was pure gold.
In the econ blogosphere, a similar dynamic has played out over the last few years. Each week a Robeast will show up, bellowing predictions of inflation and/or soaring interest rates. And each week, Paul Krugman...I mean, KrugTron, Defender of the Blogoverse, will strike down the monster with a successful prediction of...low inflation and continued low interest rates. Goldbugs, "Austrians", New Classical economists, and harrumphing conservatives of all stripes have eagerly gone head-to-head with KrugTron in the prediction wars, and have been summarily cloven in twain.
Read the whole post and, if you have time on your hands, follow the links to the different "episodes." And read the comments is you want to get a feel for the back-and-forth that often accompany these Keynesian-versus-Austerian debates. Also read Paul Krugman's response.

Here's a connected link to Brad De Long, a Berkeley economics professor who falls in the Krugman camp. I'll add links as the "other side" chimes in, as they usually do. Have fun!

Note. This isn't all fun and games, by the way. The dominance of the deficit hawks/austerians has driven much of the madness that has led to debt-ceiling debacles and the more recent sequestration disaster, driving our economy down when we should be trying to drive it up -- and could if we concentrated on jobs, jobs, jobs instead of cuts, cuts, cuts. And it's played out in the UK and Europe with austerity policies that have driven Europe back into double-dip and even triple-dip recessions, not to mention the unending pain in Spain, Greece, Portugal, Ireland, and, recently, Cyprus. Not good.

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