Everybody is dunking on Paul Krugman’s latest column, “Beware Economists Who Won’t Admit They Were Wrong,” and rightfully so. He is frequently tricky and slippery (and terribly out of touch). This column is no exception.
Krugman is sticking to the rhetorical move that was aptly exposed by Bob Murphy months ago:
Krugman begins by declaring victory. The economy, under the wise stewardship of Joe Biden, has had “one of the best years ever” because inflation is under control and unemployment hasn’t shot up.
He compares FOMC projections (which are often way off, by the way) from earlier in the year to what current data suggests, and points out that both price inflation and unemployment are doing better than expected.
Krugman’s triumph is made explicit about 300 words in: “Soft landing achieved.”
After some storytelling and victory-lapping, he gets noticeably squirmy: “Last year we didn’t know that the inflation story would turn out this well, and to be fair, rate hikes have not, in fact, caused a recession, at least so far” (emphasis added).
He’s cushioning against the prospect of a 2024 recession. He wants to be able to say he was right about “transitory inflation” and the soft landing, even in the event of a hard landing. This is why he has been so quick to cash in on the disinflation of 2023, even when Krugman’s tortured inflation statistics hit 3 percent. No future crisis, no matter how imminent, will prove him wrong, at least in his own eyes.
Indeed, he begins the next paragraph with, “What worries me is the future.” If a recession comes, it will be because the Fed listened to the wrong economists and hesitated in cutting interest rates. He says these economists are willing to risk a recession just to save face.
If only Krugman would heed the proverb (attributed to the Amish): “The best way to save face is to keep the lower half of it shut.”
