Friday, March 05, 2010

Textbook Economics & Credibility

Two items in the news today: one about someone with no standards, and one with just a little bit more...

First, NY Times editorial from Paul Krugman: Senator Bunning's Universe. We won't quote from it, but rather quote, in full, James Taranto's retort in his Best of the Web column:

Former Enron adviser Paul Krugman takes note in his New York Times column of what the calls "the incredible gap that has opened up between the parties":

Today, Democrats and Republicans live in different universes, both intellectually and morally.

"What Democrats believe," he says "is what textbook economics says":

But that's not how Republicans see it. Here's what Senator Jon Kyl of Arizona, the second-ranking Republican in the Senate, had to say when defending Mr. Bunning's position (although not joining his blockade): unemployment relief "doesn't create new jobs. In fact, if anything, continuing to pay people unemployment compensation is a disincentive for them to seek new work."

Krugman scoffs: "To me, that's a bizarre point of view--but then, I don't live in Mr. Kyl's universe."

What does textbook economics have to say about this question? Here is a passage from a textbook called "Macroeconomics":

Public policy designed to help workers who lose their jobs can lead to structural unemployment as an unintended side effect. . . . In other countries, particularly in Europe, benefits are more generous and last longer. The drawback to this generosity is that it reduces a worker's incentive to quickly find a new job. Generous unemployment benefits in some European countries are widely believed to be one of the main causes of "Eurosclerosis," the persistent high unemployment that affects a number of European countries.

So it turns out that what Krugman calls Sen. Kyl's "bizarre point of view" is, in fact, textbook economics. The authors of that textbook are Paul Krugman and Robin Wells. Miss Wells is also known as Mrs. Paul Krugman.

It seems Krugman himself lives in two different universes--the universe of the academic economist and the universe of the bitter partisan columnist. Or maybe this is like that episode of "Star Trek" in which crewmen from the Enterprise switched places with their counterparts from a universe in which everyone was the same, only evil.

Like Spock, the evil Krugman is the one with the beard.

You'd think a smart guy like Krugman would expect someone to find this and thus add a bit of nuance to his column. (Just like you'd expect someone with character and integrity to not even consider doing something like this).

And the second news event from today - From the Washington Post, The Fix:

New York Rep. Eric Massa [D-NY] will resign his House seat on Monday at 5 pm, he said in a statement Friday, a move that comes just days after he announced his plans to retire at the end of the year.

"A member of my staff believed I had made statements that made him feel 'uncomfortable," Massa said in the statement, posted on his House web site. He added, "There is no doubt in my mind I did use language ... that ... might make a Chief Petty Officer feel uncomfortable."

"It's not that I can fight or beat these allegations, I'm guilty." Massa said in a separate statement, to to his Washington and campaign staff, which was reported by his hometown newspaper, the Corning (N.Y.) Leader.

Pics are from the linked sources above.

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