Last week Krugman had penned a piece that again battered Rogoff
and Reinhart as he had done many times over the past six weeks. R&R then replied back that he has been “spectacularly
uncivil” and also “sloppy”. Krugman’s response pretty much aimed to minimize
and end the confrontation, he didn’t apologize for getting personal or for
claiming they didn’t make their data available – his response was more academic
as he highlighted that his main issue was that they used a hard/fast 90% ratio
line to show when debt becomes a big issue.
Krugman feels this particular point has had major policy implications
and led governments to be much more austerian than they would have been
otherwise.
In a later post Krugman shows us how bad things have become
in Portugal and he is angry. Angry because
he does not understand why the common folk need to suffer under austerity when economics
knows how to cure the problem. The
answer he reminds us is modest inflation and having government spend more money
to get more capital in the economy. He
then blames R&R (he doesn’t quote them by name here but we can tell who he
is talking about) because he feels their papers misled policy makers to shy
away from more spending.
Krugman then has a post where he reminisces about being in
Portugal in the 70’s. Evidently he was
there after a dictator was overthrown to help get the economy on its feet. He tells us how poor it was and then when he
returned 25 years later it had become very modern. He uses this as a segue way
into how important the current policy debate is because this improvement in
lives he feels is threatened by the current austerity. In posts last year he has even said if
austerity continues he worries about a repeat of the 30’s.
In other exciting topics – Krugman takes the view that the
coming implementation of Obamacare will be bad for --- Republicans! This is quite the contrarian point of view as
the press has been full of articles detailing how confusing things are about to
become.
Regarding inflation – Krugman believes we should have a 4%
target – (2% is what the Fed currently is targeting).
Krugman has an interesting discussion on how he doesn’t
believe conservatives are allowed to change or update their views on hot topics. He names some conservatives that have but
then says they are branded as former conservatives. What I found most
fascinating however was that in order for Krugman to make his point that the
right wing is intellectually dead since they don’t allow changing of positions
when more evidence comes in, he names examples of liberal viewpoints from
yesteryear that some liberals have moved away from to show how the left does
allow change. Some of these liberal
points include a) rent control b) airline deregulation c) emission credits and
some others.
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