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Krugman Once Again Discredits Himself

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Spiral Architect

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Outside of a few individuals I realize this is preaching to the choir, but with new blood rolling through I thought it would be good to once again visit the embarrassing trend of Krugman discrediting himself through blatant dishonesty.  I honestly thought I was getting something better when a friend pointed out the following to me.  Lesson learned. 


You can read the full story here from his hit Blog:  Here.


Here is the meat of the subject:


“The blog Social Democracy for the 21st Century has a fascinating post about Austrian patron saint Ludwig von Mises in the Great Depression, and his attempts to make sense of what was happening. It’s a revealing story, because it bears so much resemblance to current right-wing flailing – and also highlights the lessons Keynes tried to teach but so few, economists included, have been willing to learn.


First of all, as the blog tells it, von Mises, faced with the reality of depression, basically dropped Austrian business cycle theory, and for the very reason people like me have always had trouble taking it seriously. (Yes, yes, we don’t grasp the depth and profundity of a theory that can never fail, it can only be failed.) ABCT is essentially a story about the excesses of the boom; it offers no clear or plausible story about how that boom leads to a sustained slump. And von Mises was in effect already conceding that point by 1931.”



I about fell out of my chair when I read this first part since the dishonesty literally jumped off the page. I’ll take it from the top and ignore the smears he sets up (which is actually the real purpose here):


  1. Mises never conceded any point, having both spoken and written on it he continue to support his theories his whole life.  Both are documented which leads up to...    
  2. Austrian theory does offer a theory regarding the Depression as well as why it was extended further than previous recessions/depressions.  He was confident in his theories since…
  3. He put these theories to practice in Austria post WWI and the economy turned around.  He would have no reason to ignore his theories – This is text book knowledge. You can disagree with his ideas but you can’t say he ignored his own theories since he considered them integral to his own history.  Speaking of that…
  4. Misses did NOT say that excessive wages and trade unions caused the Depression, he said they extended it by not allowing prices and trade agreements to react to market changes.  His theory of business cycle goes into why the depression happened.  Again, this is documented in speeches and in writing. 


As to why Krugman is lying to his readers, outside of the usual desire to prop up collectivist Keynesian theories, must be this:


“So what was the story? According to vM, it was excessive wages — trade unions were demanding too much, and unemployment benefits were leaving workers insufficiently desperate. Sound familiar? It should — it is, essentially, the current Republican story, in which unemployment is high because we’re being too nice to the unemployed — that, as I like to say, soup kitchens caused the Great Depression.”


This hit peace is ignoring basic ideas from Mises so it can serve as political poo tossing that the liberal-conservative monkeys like to throw at each other in place of a real discussion.  I haven’t heard the few conservatives I know of say this, incidentally, but perhaps someone has so I’ll reserve judgment on his honesty in their position too. 


What is sad as that instead of offering up real differences and discussing the economics involved in a meaningful way (the toss in at the end, not included, is incidental and only offers talking points to round out the smear job at the beginning), he white washes facts (again) to score meaningless political points to those who already accept collectivist economic policy. I would have enjoyed a cross discussion.  I got errors that I can remember and I haven’t picked up a Mises book in at least 5 years. As a specialist in economics who writes on this theory, he has no excuse.  He is either mind numbingly dense or he is being dishonest.  Either way, he does propagate the myth however to those who rely on experts to give them truth so they can make informed decisions. 


I honestly don’t know why I even clicked the link and looked.  I should know better that to expect otherwise from Krugman at this point. 





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Somewhere along the line, Krugman decided to be a spin-doctor for the Democratic party, with facts being secondary to this aim.

Personally, I think it is useful to get critiques from economists who favor more government intervention in the economy (Keynesians, Monetarists, general anti-Capitalists) but, in doing so, I avoid the spin-doctors and prefer the honest critics.

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Yeah, this blog entry of his was a real turd. I like him when he debunks the mindless populism coming from the Repubs, but this had none of that (tearing down strawmen is all) and was fairly transparently carrying water for some new Demo talking points being crafted this year.


The "Bette in Spokane" thing was good. When he talks about "secular stagnation" (which is not often) its worth paying attention.


But this rant was crap...

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