Krugman links to a David Frum piece which basically points out the Krugman’s predictions between 2000 and 2011 were much more on the money than the Wall Street Journal.
A few hours later, Krugman points out the that the US 10-year bond rates reflect exactly what he said would happen.
To be clear here, I don’t think Krugman is able to predict the future — or is some super genius — nor do I think believe that there’s (too much) confirmation bias. I think that Krugman is simply a good scientist and applies the right economic theories to appropriate situations. By his own account, this all textbook stuff.
Hi, Jeffrey.
(BTW,I got to your site via David Frum)
I agree: it’s not so much that Krugman is some kind of a divine prophet. It’s just that he has stuck to some pretty basic macro economic theories that I myself learned in my first year at LSE. The reasons though why he has been right while so many others, (who should know better) have been wrong is because their own philosphical beliefs don’t work within the standard macro-economic models, so they have invented “new laws” of economics. (Or have tried to refute those economic theories which they don’t “like” but which have tended to work rather well, like Keynes’s theories of aggregate demand).
The result is that while most undergraduate economics students, given the parameters of today’s economy, especially regarding the “zero-lower-bound”, would immediately prescribe short-term public sector stimulus to increase aggregate demand, and continue the stimulus until production capacity got a lot closer to 100%, our own policy makers are now doing the exact opposite.
The fact that we are doing the opposite is a reflection on people’s refusal to go back to basics and to keep inventing new theories which agree with their “philosophies” and not with the facts.
Thus has economics become a “Faith-Based Science” (with the exception of Dr. Krugman and those like him, of course).