Swimming Against the Tide of History: Krugman-Galbraith ’96

Tide sunset

Lars Syll has brought my attention to a very interesting exchange between Jamie Galbraith and Paul Krugman from 1996 that is archived on the latter’s website (or a website created for him, I cannot tell). Much of the discussion is on long dead arguments from the 1990s that now look as antiquated as early episodes of Friends. But there are two things that are interesting about the debate.

First of all, in retrospect, it looks to me like Krugman is on the wrong side of pretty much every issue. He seems cavalier about the rising income inequality in the US — something he has since renounced (but only due to reality really beating him over the head). He shrugs off a falling labour share in national income — something which has since become so obvious that not even the flashiest debater could cover it up. At one point his support of Pete Peterson’s Social Security privatisation campaign is mentioned (yep, old Pete Pete was selling that hoary “Social Security is imminently broke” line back in ’96 and Krugman at one point fell for it).

There also seems to be a sense with Krugman that the Washington Consensus would lead to general prosperity, although it is hard to pin — one year before the Asian crisis and the subsequent fracturing of said consensus. And then there’s the move toward a budget surplus by the Clinton administration; something now argued by many to have precipitated the rise in private sector debt that ultimately led to the financial crisis of 2008.

Krugman really was swimming one way while the tide of history was washing the other. And the confidence with which he asserts himself, the sureness that he is right and that all his opponents are just making “simple arithmetic mistakes” (seriously, read the exchange) is nothing short of embarrassing in retrospect. Hell, it’s even embarrassing at the time! Krugman readily admits he fell for the Peterson propaganda!

Another aspect of the exchange that is interesting, however, is the manner in which Krugman deals with those he disagrees with. If you read the exchange carefully you’ll see that Krugman is engaged in a sort of “divide and conquer” strategy. What he does is he picks out mistakes, not that his opponent (Galbraith) has made, but that his opponent’s friends have allegedly made. He then tries to have Galbraith denounce these people under the implicit threat that if he doesn’t he will fall into the same category as them.

This denunciation, this Judas kiss, then becomes a prerequisite for Galbraith being allowed the privilege of debating Krugman. Seriously, I’m not making this up. Read it yourself:

I often regret the feeling of obligation that led me to take on that unpopular role. For one thing, there is no better way to make a man hate you than to tell him that while he was walking around priding himself on being at the intellectual cutting edge, in fact he was merely insisting that two and two must add up to at least 25. And I would much rather have interesting arguments with people who might be right than spend my time trying to explain freshman-level concepts to unwilling listeners. I would hope that Galbraith will agree with me that all these doctrines are silly. If so, he and I can go on to discuss the “real” issues.

Well, that’s certainly an, erm, interesting debating strategy. No, actually let’s call it what it is: it’s a dirty war tactic. The goal is not to debate the opposition, but to carve them up and cause chaos within their ranks. It’s sneaky. It’s unpleasant. Frankly, I don’t think I’ve ever seen it before; even on the blogs.

Of course, as we said, Krugman was on the wrong side of history. Now we all know that inequality is a root cause of our problems and that labour’s share in the national income was on a serious downward trend. Now we know that the Washington Consensus tended to lead to enormous bubbles, unemployment and the disintegration of monetary systems. And although the particulars of the debates contained in these exchanges are now long buried and lack for me any familiar freshness, one wonders in retrospect whether it was the strength of the push of the historical tide that necessitated Krugman’s guerrilla war tactics.

Nowadays, of course, Krugman is reformed. His columns echo much of what Galbraith is saying. There is talk of inequality, of the need for government deficits and the dangers of serious economic instability due to unregulated financial markets. There is silence, however, with regards to those few who were persistently making these arguments. Krugman will drop the names of dead men from time to time — Keynes, Minsky and now Kalecki — but the silence of the names of those living who had been pushing these ideas all along is nothing short of deafening.

Now, perhaps, I am beginning to understand why this is the case; why Krugman is desperate not to concede any ground to the Post-Keynesians while at the same time gradually sliding — almost seamlessly — into the positions that they hold. The difference is that, as Galbraith argues in his letters, back in ’96 the opposition were completely marginalised and had no means by which to put forward their views to the general public, while today there is a whole host of platforms for such people.

One wonders if that tide is pulling once again, and Krugman might again be caught swimming the wrong way.


About pilkingtonphil

Philip Pilkington is a macroeconomist and investment professional. Writing about all things macro and investment. Views my own.You can follow him on Twitter at @philippilk.
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9 Responses to Swimming Against the Tide of History: Krugman-Galbraith ’96

  1. Hi Philip:
    You’re right that reading the debate it seems Krugman fell for Peterson’s Social Security is broke argument. And he backtracks and apologizes. But I have my doubts. I think he supported it because in the ‘serious’ circles he frequented it was the norm to accept that Social Security was unsustainable. Nice post.

    • I think that’s the underlying point though. There is no debate taking place in the exchange — as Galbraith keeps hinting at — and what Krugman is saying over and over again is “Denounce X, Y and Z and join the ranks of the serious people!” I cannot read the exchange any other way.

  2. Phil, This one was a pleasure to read.

  3. Ramanan says:

    Krugman has a plan. It is to smoothly change his views so that nobody notices, sideline the Post-Keynesians and then claim he was the major discoverer of how economies generally work – a person who reconstructed Macroeconomics in the tradition of a few from the 1930s and have his name along Keynes and Kalecki in the pages of history. Very anti-intellectual. The future history books will punish him!

  4. Marko says:

    So now Krugman will develop his new-founded inequality religion at the LIS Center at Cuny , collecting a fat paycheck that will , I’m sure , have absolutely no influence on his efforts to combat inequality :


    That plus DeLong , at the “Washington Center for Equitable Growth” , means we have more organizations to keep our watchful eyes on – potentially two new Trojan Horses for delivering a continuation of neoliberalism , probably under some slick , to-be-determined “Fourth Way” guise ( fourth ? , fifth ? – I can’t keep up ).

    I’m sick of it. We need new blood.

  5. jobernard says:

    There’s a lot of pointless snark on this board. Let’s acknowledge it: Krugman typified the young, smug MIT New Keynesian modelers in the 80s and 90s, riding the wave of The Great Moderation and condescending (or worse) to anyone who didn’t regard Samuelson-Solow as Holy Writ. (Read his review of the elder Galbraith, for crying out loud.)

    Then came George Bush, and lots of other bad stuff.

    People evolve. No, K hasn’t given up his theory beyond of the ZLB. But he’s changed his position on plenty of issues. Instead of pointing this out with the intention of showing what a hypocrite he is, you might take satisfaction that people evolve in your direction when what you have been saying all along comes true. And be happy that they have loftier pulpits to preach from than you do. So, he writes for the NYT? So, he makes a lot of money? So what? He’s in the forefront of notable economists, including Stiglitz and Solow, who have applauded Piketty’s book, which in the opinion of a lot of people is irreconcilable with standard economics. And it’s data driven. Let’s see how he models that…

    There’s a war going on against the livelihoods of ordinary people. And that’s a lot more consequential than arguments over the consistency of economic theory. Some people here seem more concerned about winning snarky skirmishes than continuing to sustain and expand the opposition, even if it involves welcoming partial converts with high profiles and well-paying gigs who’ve been ungenerous in the past. The old term for this was “left sectarianism.”

    • I think the net impact of Piketty’s book will be positive. Unless people like Krugman are allowed the dominant interpretation. Krugman strikes me as an opportunist and his opinions seems to closely track those of the IMF. In saying that I certainly don’t care about his paycheck or his position at the NYT. I just think he’s opportunistic and I think he is trying to co-opt the study of certain aspects of the economy that others simply do better than him.

  6. Pingback: Links 5/5/14 | Mike the Mad Biologist

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