It takes only a couple of paragraphs in his latest bit of opinioneering before historian Niall Ferguson goes after economist Paul Krugman again. He deploys a combination of econo-name-calling (“deficit-loving-economist”) and quotes out of context (a favorite Ferguson gambit is to take an expansionary Krugman quote and re-use it in recessionary times). I am increasingly convinced that a tag cloud of Ferguson writing would break down into stuff about himself, stuff about Krugman, and the word “bad”.
Now, do I disagree with everything Ferguson says here? Of course not – nor am I sanguine about the U.S. balance sheet. Ferguson marshals an impressive and credible array of historical and current data to show that the U.S. and the dollar are a mess. I agree and make the same point with numbing regularity.
And Ferguson is not completely blinkered. He concedes that U.S. GDP would have been much lower in the absence of massive stimulus. He just thinks that the costs outweigh the benefits, especially given that he contends the recovery isn’t self-sustaining.
Fair enough, but if you’re going to posit that things would have been much worse, but the costs don’t outweigh the benefits, there is a missing step. What would the U.S. economy have looked like in the absence of stimulus? What would unemployment have been? What would the civil situation have looked like? If you’re going to say that things would have been worse (economically) but better (as a sovereign), you need to do the maths.