Tag Archives: paul krugman

Trump forced the Fed to raise rates. The results could be ugly.

Summary: Trump’s unexpected election forced changes in the forecasts and plans of the Fed’s leaders. Today’s decision to raise rates is their first result. Janet Yellen was quite candid about this. The implications of the rate rise are complex. The effects might prove calamitous.

Janet Yellen

Brendan Smialowski/AFP/Getty Images

Janet Yellen’s remarks at the press conference

She clearly pointed to Trump’s plans for a combination of tax cuts plus large increases in infrastructure and military spending. The Fed’s leaders have obviously been thinking about the effects of the resulting massive deficits — and decided to preemptively strike against them.

“…We’re operating under a cloud of uncertainty at the moment, and we have to wait and see what changes occur and factor those into our decision-making as we gain more clarity,”

“…Changes in fiscal policy or other economic policies could potentially affect the economic outlook. Of course it is far too early to know how these policies will unfold. Moreover, changes in fiscal policy are only one of the many factors that can influence the outlook in the appropriate course of monetary policy.”

“…There may be some additional slack in labor markets, but I would judge that the degree of slack has diminished. So I would say at this point that fiscal policy is not obviously needed to provide stimulus to help us get back to full employment. But nevertheless let me be careful that I am not trying to provide advice to the new administration or to Congress as to what is the appropriate stance for policy. There are many considerations that Congress needs to take account of and many bases for justifying changing fiscal policy.”

“…Our decision to raise rates should certainly be understood as a reflection of the confidence we have in the progress the economy has made and our judgment that that progress will continue. …It is a vote of confidence in the economy.”

“…We want to feel that if the economy were to suffer an adverse shock that we have some scope through traditional means of interest rate cuts to be able to respond to that.”

From Reuters. Also see Yellen’s opening statement at the press conference.

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Paul Krugman explains how to break the climate policy deadlock

Paul Krugman — Nobel Laureate economist, #5 on Prospect magazine’s 2015 list of the world’s top “thinkers” —  gives us powerful advice about the climate policy debate in his August 12 NYT op-ed (similar to this from a February column).

Paul Krugman

Paul Krugman. Creative Commons license.

Here’s how I would approach the issue: by asking how we know that a modeling approach is truly useful. The answer, I’d suggest, is that we look for surprising successful predictions. General relativity got its big boost when light did, in fact, bend as predicted. The theory of a natural rate of unemployment got a big boost when the Phillips curve turned into clockwise spirals, as predicted, during the stagflation of the 1970s.

So has there been anything like that in recent years? …Were there any interesting predictions from … models that were validated by events?

In fact he is discussing his own field, macroeconomics — but this insight has deep roots in the philosophy of science and applies as well to climate science. Predictions are the gold standard for validating theories. In The Structure of Scientific Revolutions (1962) Thomas Kuhn described failed predictions that undermined dominant paradigms (e.g., the Michelson–Morley experiment) and successful predictions that helped establish new paradigms (e.g., the orbit of Mercury). He said…

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Paul Krugman takes a step to clearer vision & reform of America

Summary: Paul Krugman made a remarkable admission for a political columnist in America, one that points the way to a path for the reform of America. He took a step towards seeing that there is no “reality-based party” in America.

Eye of the hurricane


“… first take the plank out of your own eye, and then you will see clearly to remove the speck from your brother’s eye.”
— Matthew 7:5.

Today both Left and Right routinely “create their own reality”. The Right invented and perfected this methodology to mobilize their followers, creating engines of disinformation such as Fox News and the Washington Times (examples here and here). The Left has copied them, making this the primary tactic for their crusades. The most obvious example is the fight against climate change, where the Left has liberated themselves from dependence on the consensus of climate scientists (as expressed through the IPCC and major climate agencies). Unusual weather (no matter if historically common) is extreme weather is climate change is anthropogenic climate change — because they say so loudly and with conviction.

Tribal Truth

“Yet in our world everybody thinks of changing humanity, and nobody thinks of changing himself.”
— Leo Tolstoy in “Three Methods Of Reform” (1900).

This acceptance of propaganda makes us a gift to our leaders. It makes us docile, weak, emotional, irrational, easily manipulated and led.

We see this clearly when it comes to the other side’s propaganda. That accomplishes nothing, and our disconnect with reality — the core break in our observation-orientation-decision-action loop — makes reform impossible. People can only fix this problem in their own community.

Which brings us to the latest from Paul Krugman – Nobel Laureate economist, hard core liberal, Democratic Party hack, and #5 on Prospect magazine’s 2015 list of the world’s top “thinkers”.

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Paul Krugman sees the tactics of the Left, with horror!

Summary: In his column today Paul Krugman makes an important observation, although he’s oddly unaware of its full significance.

Paul Krugman

Paul Krugman. Creative Commons license.


Paul Krugman explains “Why I Haven’t Felt The Bern” — He complains about Team Sanders.

“In each case the story runs into big trouble if you do a bit of homework; if not completely wrong, it needs a lot of qualification. But the all-purpose response to anyone who raises questions is that she or he is a member of the establishment, personally corrupt, etc.. Ad hominem attacks aren’t a final line of defense, they’re argument #1.

“…It’s about an attitude, the sense that righteousness excuses you from the need for hard thinking and that any questioning of the righteous is treason …When you see Sanders supporters going over the top about “corporate whores” and such, you’re not seeing a mysterious intrusion of bad behavior into an idealistic movement; you’re seeing the intolerance that was always just under the surface of the movement, right from the start.”

He complains about unfair tactics of the Left, the same tactics that the Left’s climate activists have used to all who challenge their apocalyptic news stories — which go far beyond anything in the IPCC’s reports. He describes them quite accurately, showing (again) that although he is a brilliant economist, he is lacks self-awareness.

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Paul Krugman talks about economics. Climate scientists can learn from his insights.

Summary: A new presentation by Nobel Laureate Paul Krugman discusses economics. His insights apply broadly to sciences playing a key role in public policy, especially climate science. Let’s hope others learn from it.


Slide #1 from “What have we learned since 2008“, a presentation by Paul Krugman at CUNY, 19 February 2016. He is discussing economics, but these insights have powerful implications for the public policy about climate science — and the increasing number of other policy issues relying on scientific evidence.

Some annoying propositions:

  1. Complex econometrics never convinces anyone.
  2. “Complex” includes multiple regression.
  3. Natural experiments rule.
  4. But so do surprising predictions that come true.

Economics is a less-mature science than climate science, but is in some ways more developed. Their literature has superior standards for transparency (e.g., requiring archiving of methods and data). More importantly, economics has far more experience working with political decision-makers and the public. So what might be Krugman’s advice to them? We have only his slides, not his transcript; this is my interpretation of them.

“Complex econometrics never convinces anyone.
‘Complex’ includes multiple regression.”

“The criterion of the scientific status of a theory is its falsifiability, or refutability, or testability.”
— Karl Popper in Conjectures and Refutations: The Growth of Scientific Knowledge (1963).

Climate models are complex engineering code analogous to econometric models. Both have a core of hard science on which are built a web of assumptions and approximations. For climate models, their foundation is basic physics but their implementation of physical, chemical, and biological processes are tuned parameterizations.

Models are powerful research tools for scientists, but their use in major public policy debates requires higher standards of validity. Non-scientists have a century of experience evaluating the utility of scientists’ findings on matters where the costs and stakes are high. Our hard-won skepticism about such theories requires observational proof, not just abstruse calculations. For more about the policy use of models see…

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Krugman shows us why the Left loses, despite its advantages

Summary: This is the fourth in a series about why the Left loses. America’s drift to the Right since 1980 has not only become impossible to ignore, but has accelerated despite the many fundamentals favoring the Left. Such as demographics and the increasing acceptance of behaviors an anathema on the Right (e.g., gay marriage, abortion). Increased concentration of wealth and income by the 1% explains much of the Right’s success. As this series will show, weakness of the Left explains much of the rest.

Closed Mind


  1. A symptom of the problem
  2. Diagnosis
  3. Significance
  4. Other posts in this series
  5. More evidence

(1)  A symptom of the problem

Triumph of the Wrong“, Paul Krugman, op-ed in the New York Times, 6 November 2014 — Excerpt:

The race is not to the swift, nor the battle to the strong, neither yet bread to the wise, nor yet midterms to men of understanding. Or as I put it on the eve of another Republican Party sweep, politics determines who has the power, not who has the truth. Still, it’s not often that a party that is so wrong about so much does as well as Republicans did on Tuesday. … So now is a good time to remember just how wrong the new rulers of Congress have been about, well, everything.

First, there’s economic policy. … In short, the story of conservative economics these past six years and more has been one of intellectual debacle — made worse by the striking inability of many on the right to admit error under any circumstances.

Then there’s health reform, where Republicans were very clear about what was supposed to happen: minimal enrollments, more people losing insurance than gaining it, soaring costs. Reality, so far, has begged to differ, delivering above-predicted sign-ups, a sharp drop in the number of Americans without health insurance, premiums well below expectations, and a sharp slowdown in overall health spending.

And we shouldn’t forget the most important wrongness of all, on climate change. As late as 2008, some Republicans were willing to admit that the problem is real, and even advocate serious policies to limit emissions — Senator John McCain proposed a cap-and-trade system similar to Democratic proposals. But these days the party is dominated by climate denialists, and to some extent by conspiracy theorists who insist that the whole issue is a hoax concocted by a cabal of left-wing scientists. Now these people will be in a position to block action for years to come, quite possibly pushing us past the point of no return.

One of these three things is not like the others. For the first two Krugman clearly identifies the GOP view and provides rebuttals, all supported by links (I agree 100%). The third asserts that the GOP is dominated by climate extremists — and implies that the Democrats represent the consensus of climate scientists. He provides no evidence for either claim; there are reasons to doubt both. Certainly the public does, with climate change near the bottom of major threats (See Gallup polls, other polls, other evidence).

Is the Republican Party “dominated by denialists?” In Leftist usage, “denialist” has no fixed meaning beyond “people who disagree with me about climate change”. Much like “terrorist” to the Right, it’s a political tool rather than a category. It includes prominent climate scientists skeptical of some aspects of the IPCC’s views (e.g., Judith Curry and Roger Pielke Sr) — or critical of the Left’s exaggerations of the IPCC’s views, and have supported their view with studies in the peer-reviewed literature (e.g., Roger Pielke Jr).

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Conservatives show us their thinking, not well glued to reality

Summary: As the GOP prepares to shut down the government to prevent millions of people getting health care, it becomes vital to understand how they see America. The answer, obvious to anyone paying attention: badly, as through a mirror darkly. Here we look at a few examples, part of a series about this rogue force in US politics (links to other chapters are at the end).

Going Rogue

The pathfinder, taking the GOP off the reservation



  1. The GOP fact gap
  2. GOP CEOs have the fact gap
  3. Looking at the Right-wing fact gap in economics
  4. Orson Scott Card shows us GOP thinking
  5. For More Information


(1)  The GOP fact gap

Paul Krugman describes a serious and topical problem in “The Wonk Gap“, New York Times, 8 September 2013 — Excerpt:

… the widening “wonk gap” — the G.O.P.’s near-complete lack of expertise on anything substantive. Health care is the most prominent example, but the dumbing down extends across the spectrum, from budget issues to national security to poll analysis. Remember, Mitt Romney and much of his party went into Election Day expecting victory.

… And the point is that episodes like this {misinformation about Obamacare} have become the rule, not the exception, on the right. How many Republicans know, for example, that government employment has declined, not risen, under President Obama? Certainly Senator Rand Paul was incredulous when I pointed this out to him on TV last fall. On the contrary, he insisted, “the size of growth of government is enormous under President Obama” — which was completely untrue but was presumably what his sources had told him, knowing that it was what he wanted to hear.

For that, surely, is what the wonk gap is all about. Political conservatism and serious policy analysis can coexist, and there was a time when they did. Back in the 1980s, after all, health experts at Heritage made a good-faith effort to devise a plan for universal health coverage — and what they came up with was the system now known as Obamacare.

(2)  GOP CEOs have the fact gap

Fools and Fixers“, Paul Krugman, New York Times, 29 September 2013 — Excerpt:

Lydia DePillis has an interesting piece interviewing Paul Stebbins — a CEO who was very involved with Fix the Debt — in which Stebbins acknowledges that business is part of the problem in Washington, and proceeds to illustrate, unintentionally, just why that is. You see, if he’s any indication, big business is completely clueless about both the economics and the politics of the situation.

… {see the article for the supporting evidence and logic}

In short, this particular CEO comes across as completely out of touch with the reality of our economic and political situation. And then he wonders why politicians won’t listen to people like him.

The thing is, I suspect that he’s typical. Corporate America is led by men who may be very good at their jobs (or not, in some cases), but have no grasp at all of the real issues facing America as a whole — the special problems created by an economy stuck in a liquidity trap, the paralysis caused by the radicalization of the GOP. They can throw lots of money at Washington, and it’s effective at tilting policies on microeconomic issues their way. But they have no influence on the big decisions, because they don’t even understand what those big decisions are.

(3)  Looking at the Right-wing fact gap in economics

This problem appears to be growing worse. It quickly becomes evident in discussions with conservatives about simple facts. Economics is the most obvious. It’s a major theme in the comments on the FM website, and frequently appears in email discussions.

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