Saturday, April 3, 2010

Krugman Revealed

This article is now over a month old, but hilarious. It's a piece in the New Yorker, March 1 2010 The Deflationist which compiles interviews with Krugman and his wife Robin Wells. It's probably more than we really need to know, but in some instances quite revealing.

1. Krugman typically resides at the center of the Universe. On page 44, Krugman says "M.I.T. in the mid-seventies was a sort of Athens of economics - everybody was there." Everybody? Apparently there was absolutely nothing going on in Chicago, Minnesota, Rochester, or anywhere in California.

2. In his mind, Krugman is Loretta Lynn (and not the real one, but the fictional one, as played by Sissy Spacek). Again on page 44, Krugman is talking about presenting his early work at the NBER in July 1979. "The hour and a half in which I presented that paper was the best ninety minutes of my life. There's a corny scene in the movie 'Coal Miner's Daughter,' in which the young Loretta Lynn performs for the first time in a noisy bar, and little by little everyone gets quiet and starts to listen to her singing. Well, that's what it felt like: I had, all at once, made it." Do I detect a hint of narcissism? First, when we present papers, we have no idea what is going on in the heads of the audience. You can get a few hints of what people are thinking from the questions they ask, but any notion Krugman had of his success at the time would seem to have more to do with his own conceit than the pathbreaking nature of his ideas. Typically, revolutionary ideas in economics (or any other field) by their nature cannot be absorbed in 90 minutes. Eventually Bob Dylan was recognized as a revolutionary who pushed forward the frontiers of music, but in 1965 the typical reaction was "What the hell is that?"

3. Krugman tells us more than we need to know. The trials of traveling, on page 46: "The trick with underwear is to wring it out and then press down-"

4. Krugman gives himself too much credit. On page 47: "I can organize my thoughts, but I can't organize my office and I certainly can't organize other people." Yes, and we're not sure about the thoughts either.

5. Writing a textbook is tough. On page 47: "You have to put yourself back in the mind of an eighteen-year-old." (or maybe Loretta Lynn) "And it has to be impeccable. If you're writing an academic paper, if you have some stuff that's blurrily written, that won't do too much harm. If you write a newspaper article and a third of the readers don't get it, that's a success. But a textbook has to be perfect." Well, that explains a lot. If blurry writing means what I think it does, that's usually grounds for rejection in the journals I'm familiar with. Maybe he's talking about the QJE?

6. Krugman is uninformed. On page 47: "We were the only textbook that incorporated the financial crisis, as we were chronically late." The idea is that being late allowed him to incorporate the crisis in his book, but it becomes clear in the article that by October 2009 he still was not done with the manuscript, and it did not come out in print until early in 2010. The third Canadian edition of my book Macroeconomics came out in October 2009 (and it has financial crisis stuff in it). I think Charles Jones's intermediate macro book also came out in the fall, and he did the financial crisis as well. My fourth US edition came out in February 2010, roughly concurrently with Krugman and Wells, and it's full of financial crisis stuff.

7. Krugman on the differences between micro and macro. Page 47: "In micro, the rules of the game are clear. Of course, you can do stuff that involves people not being fully rational, but the bulk of it is the full neoclassical thing, rational individuals interacting with markets that are either perfectly competitive or imperfectly competitive in well-defined ways, whereas macro tends to be a lot of ad-hoc stuff. You say, 'I have to make this assumption about what's going on, which I can't fully justify in terms of the micro foundations, but I'll make it anyway, because it seems to fit what happens." Here, imagine me with a look on my face like I have eaten something disgusting. Krugman seems to be living in Macroland circa 1967, where we operate under a different set of rules that permit us to construct models based on religious beliefs rather than sound science.

8. On his New York Times Magazine piece, "How Did Economists Get it so Wrong?. "There was no personal invective in what I wrote. I never insulted anybody's personality. It was always at the level of ideas." Sure. In that piece, Krugman essentially argued that all of macroeconomic research since 1970 was a waste of time, and we should go back to IS-LM. A reading of the piece makes it clear that Krugman is essentially ignorant of macro post-1978, so it's remarkably conceited of him to think he can stick his neck out and make such bold statements. The economists I see most often have spent most or all of their careers trying to contribute to advancing macroeconomic thought, and it should not be hard to understand that they might be unhappy, indeed insulted, by Krugman. To have some ignoramus with a Nobel Prize telling the world you are an idiot doesn't go down well.