Saturday, September 3, 2011

Landsburg and Krugman

I'm late to the Landsburg-Krugman debate on public finance, but Landsburg sums it up here. I of course think he's right, but seems to have overstated his point - I left a comment on the post to that effect:

"I’m late to this exchange, but I’m confused about where Krugman said this Steve: “Krugman says that under no assumptions does it make sense to cut expenditures without raising taxes.”

Could you clarify?

He seems to have initially made an argument that was contingent on an invalid assumption. He doesn’t seem to have said that that argument applies to all assumptions.

You seem to want to have it both ways and I’m not sure that’s possible: is Krugman guilty of making an inaccurate general claim or is he guilty of misapplying an accurate special claim.

It seems he’s guilty of the latter only, and can still maintain that given his assumptions Cantor is very wrong. It just moves the debate from public finance theory to the strength of Cantor’s assumptions

The posts from Krugman and Landsburg have been interesting and informative. The commentary posts from others I've read about the debate - less so. I truly don't understand peoples' reaction to this guy. He can get blustery, but there's a lot worse out there - considerably worse. And most of the people that are worse about it often don't acknowledge their own "shrill"ness the way Krugman does, and they don't bring the intelligent commentary to the table that compensates for the occasional attitude. People just get weird when you challenge their beliefs.

OK - now back to math homework for real so that in my career I don't confuse marginal behavior when there's a disturbance at an optimal point with marginal behavior globally the way Krugman did.

UPDATE: Now that I think about this a little more, I guess you could argue he's making an inaccurate general claim. It just seems weird that Landsburg is trying to criticize him on both counts. If you interpret Krugman as making a general claim that is wrong you can't criticize him for being Panglossian because he is wrongly making the claim that that particular optimal behavior applies whether policy is perfect or not. If, on the other hand, you interpret Krugman as making a special claim that is right for (1.) perfect policy, or (2.) Krugman's understanding of what is imperfect about current policy, but not (3.) Cantor's understanding of what is imperfect about current policy, then you can't accuse him of making an inaccurate general claim - only of misapplying a special claim. Anyway... not that it really matters which way you want to read Krugman. But I thought it was interesting how people can pile on, even in contradictory ways. I think Krugman was making an argument that made good sense given his assumptions, but that because he didn't think Cantor's assumptions were reasonable, he didn't consider the fact that his argument was incoherent under Cantor's assumptions. So the argument is really over assumptions about in what way the federal budget isn't optimal.

And before anyone spins this as "defending Krugman", I just want to point out that thinking Krugman is wrong but that we shouldn't contradict ourselves in pointing out that he is wrong isn't really "defending Krugman".

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