Freshwater Rage

Freshwater Rage

Krugman has weighed in on the response from the Chicago economic team (only one of whom was willing to be identified) to his essay on how the economists got it wrong and I like what he said because it was "cogent" (see attached - and thank you Dale for fixing my blog site so that I can attach articles again!).

Before I add my 2 cents on Krugman's post, I want you to think about the vituperative nature of Cochrane's attack inclusive of three separate comments on Krugman's use of "cartoons." Krugman didn't put the "cartoons" in his article - the NY Times editorial staff did. Cochrane was foolish and hysterical in between showing us all that he knows "economics." Whatever your position on the Chicago team's thoughts, it's a "TKO" for Krugman just on the quality of what he wrote versus the hysterics in between textbook quotes from Cochrane. I frankly also could not believe that Cochrane defended the position that fiscal stimulus is a zero sum game (so, such infrastructure as "bridges" and "roads", and the wages we pay people to build those, adds up to "zero"?). Has this guy ever met a payroll?

On to Krugman: his point that freshwater economists dismissed the work of all Keynesians over the past 30 years with "sneers" strikes me as the truth as I've heard that observation from many others before Krugman. He goes on to talk about "active purges" of competing views - students were not exposed to alternatives. Again, easily believeable. There is a logic to temporary fiscal expansion that the "Chicagos" refuse to see. And, as Krugman says, freshwater macro will get even more insular and people will pay even less attention.