Paul Krugman & the “so-called boom”

You have to hand it to Paul Krugman: He does know how to absolutely madden his critics, the sorts of people who think that the Princeton economist and New York Times columnist is near demonic. Because Paul Krugman is stubbornly convinced that the current economic resurgence is no resurgence at all.

Here is his argument: In today’s column Krugman concedes that the unemployment rate of 5.9 percent — which he cagily calls the “measured” rate — isn’t that high by historical standards. But, he says, there is “something funny about that number”: an unusually large number of people have given up looking for work, so they are no longer counted as unemployed. And more measures apply, like the length of time it takes laid-off workers to get new jobs. Given all of this, Krugman argues that the gains are going mostly to corporate profits, which rose at an annual rate of more than 40 percent in the third quarter. Yes, those gains are going mostly to stockholders and executives, but he points out that while more than half of Americans own stock, most own very little, so they don’t participate.

Krugman’s points aren’t outright wrong, as certain of his tireless critics think. It’s just that he is walking very far out a very thin plank. What makes his non-boom hypothesis falsifiable? What level of job growth over what period would cause Krugman to turn tail and proclaim all’s well with the economy? Merely a return to historical norms? Why, then, the use of the word “boom”? Must the economy “boom” again for him to feel that prosperity is returning and growing?

After all, Krugman (like myself) was a staunch critic of the boom-bubble economy of the late 1990s, so it is peculiar, to say the least, for him to crankily complain that only another boom now would prove that the economy is finally back on its feet.

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Comments

  1. Chris M. says:

    Must be tough having the same initials as Krugman. How do you live with yourself? :-)
    Interesting that one of Krugman’s biggest critics is a former RealMoney columnist.
    http://poorandstupid.com/

  2. Paul K says:

    Actually, didn’t you know? Paul Krugman and I are the same person. I just put on the beard and moustache and scurry off to Princeton now and then to confuse the uninitiated. And, yes it is interesting that Don Luskin, a former RealMoney columnist, has become Krugman’s most vocal critic. You have to give Don credit: whether you side with him or with Krugman, Luskin is positively tireless.

  3. Chris M. says:

    Well, rumor has it, Don was not doing well as a mutual fund manager, and found work writing for the National Review, where he writes lot’s of articles slagging Krugman, and publishes them on the poorandstupiod website. That’s the rumor, anyway.
    But, ah, just don’t call Don a “Stal…” otherwise you might got a nasty letter from his lawyer, who will try and “out” you. And then everyone will REALLY know your are the PK at Prineton.
    http://www.theregister.co.uk/content/archive/33669.html
    Note: Atrios is gay

  4. Commandante of the Cubicle says:

    The only meaningful aspect of the job market is how quickly the unemployed are able to find work where their salary and benefits are comparable to what they lost.
    If a person goes from a $42,000.00 job w/ benefits to a $25,000.00 job w/o benefits, it is only marginally better than being unemployed.