What I really said was that Krugman's responses to my challenge to him have all been to kick up a lot of highfaluting jargonized academic theory to offer an after-the-fact and entirely conjectural explanation of a claim that was initially presented in his column as nothing more than common-sense open-and-shut arithmetic -- that Bush's tax cuts spent $500,000 each to create 1.4 million $40,000 jobs.Ahem.
"a lot of highfaluting jargonized academic theory"
Unless Donald happens to be a grizzly 1890s prospector, that's one of the most profoundly stupid things I've ever seen written about economics. That's saying a lot: I've seen an awful lot of stupidity over the years I've been on the Internet. What Donald either is in denial about or doesn't get is that Prof. Krugman isn't offering any kind of "after-the-fact" explanation- he is, as he has repeatedly stated, merely describing the assumptions that underlie the thinking of himself and many (if not most) other economists. The assumption was always there, merely unstated. Donald's attack appears to have come partially out of his ignorance of these commonplace assumptions, partially due to his being financially, emotionally and intellectually wedded to a crank economic theory that most respectable economists wouldn't touch, and partially due to old fashioned cognitive dissonance related to both of these. Fortunately, those of us who are neither ignorant, tendentious, nor so brittle as to see debate as a threat to our sense of self can see this for the sad spectacle that it is. Sorry, Donald, it wasn't that he lied, it's that you dropped out of Yale before anybody taught you any economics.
Does it matter that this particular species of elephant shit happens to be a "signature academic issue" for Krugman? For the seemingly infinitely vain Krugman, it does. He writes,And with this, Luskin keeps on digging deeper and deeper. The point of an economic model is not that it is a reflection of all the factors of an economy, but that it illustrates the relationships that make up parts of that economy. By understanding the relationship in the simplified realm of modelling, you can figure out how it works in the "real world". Krugman used this to great effect when talking about the division of resources between secondary, primary, and tertiary industry using a "hotdogs and buns" model. While this model was hardly "realistic", it built a very compelling picture of why it's important not to confuse job gains and losses in one sector of the economy with the economy as a whole.
"...I set out to write down a fully worked-out, no loose ends model to show that liquidity traps can't really happen. (The purpose of such a model is to help you think clearly about an issue - realism is not the point.) To my surprise it showed that liquidity traps can indeed happen; Japan's trap was real. And Japan remains stuck in that trap. That in itself makes the liquidity trap a very important subject..."
What makes it very important? The fact that Paul Krugman created a model? A model about which he himself says "realism is not the point"? Stop the presses! I can see the headlines now... "Economist Creates New Model! World Leaders Rush to Princeton Despite Non-Realism!"
More importantly, where is the vanity in Prof. Krugman attempting to disprove liquidity traps and discovering that he was wrong? Where is the vanity in working from that piece of knowledge derived from an admitted (and corrected) error? Especially considering that everybody and his dog was lauding Prof. Krugman for his insight regarding Japan's economy, I'd say it takes some level of humility to admit that this knowledge comes from being proven wrong. Somebody as tendentious and brittle as Luskin has demonstrated himself as being time and again would have ignored the results, spun them, or simple let it drop. I'm sure that the vast majority of Movementarians would. Prof. Krugman did not, and admits it when rebutting a dishonest and tendentious attacker to boot!
To repeat a variation on a phrase I've grown attached to, Paul Krugman isn't the vainglorious one here.