It seems that some hardcore ninny took to the Google+ platform disguised as Paul Krugman and used that venue to disseminate some controversial statements about yesterday's earthquake.
Those statements included this: "People on twitter might be joking, but in all seriousness, we would see a bigger boost in spending and hence economic growth if the earthquake had done more damage." Evidently, enough people were fooled by this that it became a minor kerfuffle on Twitter. That's a result disingenuous hackery is known for!
Said ninny came clean on the Internet today, and the confession he leaves behind only demonstrates that the hackery of his expostulation far exceeds the hackery of his puerile internet impersonation. Naturally, he thinks he's built some sort of ironclad argument:
I do not regret writing it and I hope it will enlighten many on the perverse economic views held by a Nobel winning economist writing for the New York Times who also lectures at Princeton University. While Paul Krugman did not write the above statement, he has made similar statements within the year and I would not be surprised if Paul Krugman did not in fact hold this view.
On March 15, 2011 Paul Krugman wrote this on his blog:
"And yes, this does mean that the nuclear catastrophe could end up being expansionary, if not for Japan then at least for the world as a whole. If this sounds crazy, well, liquidity-trap economics is like that -- remember, World War II ended the Great Depression."
Three days after the 9/11 tragedy Paul Krugman had this to say:
"Nonetheless, we must ask about the economic aftershocks from Tuesday’s horror.These aftershocks need not be major. Ghastly as it may seem to say this, the terror attack -- like the original day of infamy, which brought an end to the Great Depression -- could even do some economic good."
If you showed any disgust at my fake comment written on Google+, I expect you would show equal antipathy for the two quotes above.
Even if the act of impersonating another person in order to ascribe false beliefs wasn't the more "disgusting" thing here, the call for equal antipathy is something of a joke. And this becomes readily apparent the instant you actually follow those links above to Krugman's own words.
Let's take a look at what Krugman actually said about the economic impact of the earthquake/tsunami/nuclear reactor disaster in Japan. I must issue an apology in advance for the longish blockquotes -- the reason our Google+ Krugman-manque did not do the same is because doing so would decimate his argument that Krugman, the hard-hearted Keynesian, wishes to spur the economy through increased disaster:
Life and business go on; so I guess we have to talk about the economic impact of the Fukushima nightmare.
One set of impacts involves disruption of supply chains: Japanese chips and other components are an important part of world manufacturing — you really need to think of China, Korea, Japan and so on as being part of an East Asian manufacturing complex –and it’s not clear yet just how much damage will be done.
But what I’m hearing a lot is worries about financial impacts. Japan will clearly have to spend hundreds of billions (dollars, not yen) on damage control and recovery, even as revenue falls thanks to the direct economic impact. So Japan will become less of a capital exporter, maybe even a capital importer, for a while. And this, so the story goes, will lead to soaring interest rates.
Krugman goes on to cite statistics that demonstrated that interest rates were, at the time of his writing, not soaring.
Here's how Krugman concludes:
And yes, this does mean that the nuclear catastrophe could end up being expansionary, if not for Japan then at least for the world as a whole. If this sounds crazy, well, liquidity-trap economics is like that — remember, World War II ended the Great Depression.
So, back to Japan: I’m terrified about the possible loss of life; nervous about the disruption of world production; not worried at all about the impact of Japanese borrowing on world bond markets.
In other words, the disaster in Japan "terrified" him personally and unnerved him economically, but on the narrow matter of "Japanese borrowing on world bond markets" -- the specific thing that he detected an inordinate media obsession over -- he was "not worried."
This is hardly an argument in favor of "more damage." More damage would have further ruined world manufacturing. More damage would have exacerbated the downturn. The damage that was wrought did exacerbate the downturn. But what happened to world bond markets? Well, if you're interested, the current yield on Japan's 10-year bonds is 1.02. The current yield on U.S. 10-years is 2.20. This is precisely where they were on March 15, 2011, when Krugman said they would not soar.
Let's move on to the post Krugman wrote three days after the September 11th attacks. Here's the full paragraph of the quote cited by the faker:
These aftershocks need not be major. Ghastly as it may seem to say this, the terror attack -- like the original day of infamy, which brought an end to the Great Depression -- could even do some economic good. But there are already ominous indications that some will see this tragedy not as an occasion for true national unity, but as an opportunity for political profiteering.
It's no wonder that faux-Krugman chops that paragraph off at the end of the first sentence. Considering that he's essentially using a national tragedy to indulge in some political profiteering, I'd say that Krugman had his imitator's number years ago.
But, as to Krugman's material argument, here it is:
About the direct economic impact: The nation's productive base has not been seriously damaged. Our economy is so huge that the scenes of destruction, awesome as they are, are only a pinprick. The World Trade Center contained 12 million square feet of office space; that's out of 375 million square feet in Manhattan alone, and 3.5 billion in the United States as a whole. Nobody has a dollar figure for the damage yet, but I would be surprised if the loss is more than 0.1 percent of U.S. wealth -- comparable to the material effects of a major earthquake or hurricane.
The wild card here is confidence. But the confidence that matters in this case has little to do with general peace of mind. If people rush out to buy bottled water and canned goods, that will actually boost the economy. For a few weeks horrified Americans may be in no mood to buy anything but necessities. But once the shock has passed it's hard to believe that consumer spending will be much affected.
Will investors flee stocks and corporate bonds for safer assets? Such a reaction wouldn't make much sense -- after all, terrorists are not going to blow up the S&P 500. True, markets do sometimes react irrationally, and some foreign markets plunged after the attack. Since then, however, they have stabilized. On the whole it's just as well that our own markets have stayed closed for a few days, giving investors time to calm down; the administration was wrong to put pressure on stock markets to reopen right away. By the time the markets do reopen, the worst panic will probably be behind us.
So the direct economic impact of the attacks will probably not be that bad. And there will, potentially, be two favorable effects.
This piece, in general, is of a particular subgenre of colummn-writing that was in full-flower 72 hours after the September 11th attacks -- "Let's Slowly Try To Settle Our Jangled Nerves, America, This Is Not The End Of Everything." In this case, Krugman's argument is simple: The economic losses incurred in the attacks are surmountable, the global markets are stabilizing, if you want to go out and buy some bottled water to soothe those nerves and restore your "confidence," go ahead -- in fact, you will be doing the economy as a whole some good.
There's no argument here -- nil, zero, the null set! -- about how the economy would be better off if the 9/11 terrorists had done more damage. In fact, the noteworthy limitations of the extent of the damage, which Krugman quantifies ("I would be surprised if the loss is more than 0.1 percent of U.S. wealth"), are a crucial feature to his overall argument, which is, again, "This is not the end of everything." Had there been more damage, Krugman's argument actually becomes harder to make.
These are just some things you can learn about Krugman's opinions if you actually read them, instead of cropping them in order to transform your juvenile identify theft into some sort of high political argument as an after-the-fact justification.
Of course, the larger bit of hackwork here was given a name by Matt Yglesias only yesterday -- "The Anti-Keynesian Two-Step":
The fact that breaking windows would make a society poorer (fewer windows) is precisely why nobody ever proposes stimulating the economy by deliberately smashing windows. But the way the dialogue works is that first a Keynesian observes that fiscal stimulus can increase growth in a depressed economy. Second, as an attempted reductio, a conservative says “if that was true, then you could increase growth by breaking a bunch of windows.” Third, the Keynesian accurately points out that you could, in fact, increase growth by breaking windows. Fourth, the conservative accuses Keynesians of wanting to break windows or believing that window-breaking increases wealth. But nobody ever said that! The point is that we have very good reasons to think smashing windows would be a bad idea—there’s more to life than full employment -- and that’s why Keynesians generally want to boost employment by having people do something useful like renovate schools or repair bridges.
Krugman, in a response that came before he even found out that someone was impersonating him on Google+, observed, "You have to assume that this kind of argument is made in deliberate bad faith -- although I suspect that many of these people don't remember what it is to make an argument in good faith."
I'd say that's correct! And now it's high time for somebody with a Google+ account to quit the fields of identity theft and economics blogging and find a new hobby.
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