Friday, November 27, 2009


Hamilton vs. Krugman

It's Econbrowser in a cage match with Conscience of a Liberal. I don't have the energy to referee this one. The topic is whether we should be worried about the government's fiscal situation. Noteworthy is that Hamilton alludes to Krugman's 2003 worries about the deficit, and Krugman responds.*

* And no, the response wasn't, "I was a partisan hack back then, my bad." It's more like, "A 40% debt under Bush is scarier than an 80% debt under Obama, because Bush is stupid and evil." You think I'm kidding, don't you?

No, I think that is what Krugman would say since there is no way he would admit that the two arguments are contradictory.
Well, actually Krugman claims he was wrong about the Bush deficits. And his argument is far more nuanced than you've characterized it.

This isn't an apology for Obama or Krugman, but c'mon: a substantial share of the growth of the deficit is from the recession Bush handed Obama -- that's the cyclical portion. And W also handed Obama a growing secular deficit.

PK's current lack of concern is coherent: the cyclical portion is temporary, and the secular portion will go away once once Bush policies are stopped and social democracy established.

Being internally coherent is not the same as being right, unfortunately...and Hamilton nicely explains this.
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