Krugman Triples Down on His Smear of Friedman and Bernie

William K. Black
February 21, 2016     Bloomington, MN

Paul Krugman is plumbing new depths of moral obtuseness, arrogance, and intellectual dishonesty in what is now his third smear of the well-respected economist Gerald Friedman in two days.  My prior column discussed Krugman’s two columns on February 17, 2016.  Here is Krugman’s lead in his column dated February 19.

On Wednesday four former Democratic chairmen and chairwomen of the president’s Council of Economic Advisers — three who served under Barack Obama, one who served under Bill Clinton — released a stinging open letter to Bernie Sanders and Gerald Friedman, a University of Massachusetts professor who has been a major source of the Sanders campaign’s numbers. The economists called out the campaign for citing “extreme claims” by Mr. Friedman that “exceed even the most grandiose predictions by Republicans” and could “undermine the credibility of the progressive economic agenda.”

That’s harsh. But it’s harsh for a reason.

But why did they send a “harsh” and “stinging” letter in a manner calculated to try to destroy the career of an economist?  If they found a grievous error in Friedman’s work, why didn’t they email him and point it out?  Why did they personalize the attack and suggest that he must be doing it for Bernie?  Why did they personalize their attack on Bernie, who did not commission Friedman’s study?  Why has Krugman tripled-down on the personal attacks on Friedman and Bernie?

Here are a few things that a reader would want to know, but would never learn from the Gang of 4 or any of Krugman’s three efforts to smear Friedman.  First, Friedman is a political supporter of Hillary Clinton.  He did not gin up an economic study to benefit his favored candidate.  He looked at the economic impact of Bernie’s proposals because that is what macroeconomists do.  It is not clear whether the Gang of 4 did the minimal due diligence to discover this fact before they decided to smear Friedman by implying that he was a political hack shilling for Bernie.  It is certain that they know now and should immediately correct their open letter, formally withdraw it, and apologize to everyone they smeared.

It is certain that Paul Krugman has known since, at the latest, his second post smearing Friedman and Bernie that Friedman, like Krugman, is a Hillary support.  Krugman has not bothered to tell his readers that critical fact, and continues to smear Friedman in a manner designed to convey the opposite to his readers.  This is unworthy of him.

It is clear that Krugman realized almost immediately after his morning post on February 17, 2016 that the Gang of 4 and he had been caught red-handed in a smear of Friedman and Sanders.  His second post, two hours later, admitted that the Gang of 4’s smear was devoid of any logical criticism of Friedman.  As Krugman phrased it, the open letter “didn’t get into specifics.”  Yes, that’s part of what makes it a smear.  You call an economist’s work garbage ginned up to support his favorite candidate – and you never provide a logical explanation with a single specific of what the economist supposedly did so wrong that he should be, not corrected, but publicly humiliated.  And no, they did not leave the specifics out of their open letter in order to avoid humiliating Friedman while sending him a detailed private email detailing his grievous specific errors.

The truth is that the Gang of 4 and Krugman launched their smear of Friedman without pointing out a single error in his work.  Indeed, that only begins to reveal the truth, for Krugman plainly did not evaluate the accuracy of Friedman’s modelling before he chose to smear Friedman.  Two of the economists, Austan Goolsbee,and Laura D’Andrea Tyson do not do macro modelling and Alan Krueger is overwhelmingly a labor economist.  Christina Romer is the only true macroeconomist.  Goolsbee and Tyson would not have been able to critique Friedman’s modeling and even with Alan Krueger’s econometric skills he would have had to invest a great deal of time to be able to do so.  I would love to take the deposition of each member of the Gang of 4 and Krugman.  Journalists need to ask just how long each spent reading Friedman’s studies and obtain the contemporaneous notes they made during their reading an analysis of the studies before they wrote the letter.  I guarantee that the answers will shock readers.

Did even one of you consider the ethics of trying to destroy Friedman’s career as a cynical means to your desired end of harming Bernie’s election prospects?  What you have done is an unethical abuse of power and status for the most unseemly of goals – political advantage.

One of the reasons we can be so confident that any deposition and document discovery request revealing the Gang of 4 and Krugman’s contemporaneous notes would be so shocking is that a journalist has gotten into the fray and tried to bail out the Gang of 4 and Krugman.  She did not understand that she was actually damning both by checking with the Gang of 4 on what work they actually did before launching their public smear campaign.  She reported on the sole basis for the Gang of 4’s smear:  “This was not because they reran the numbers, to be fair, but because they seem far-fetched.”

I will take this slowly for the benefits of journalists who wish to write about this subject.  That sentence condemns the Gang of 4 and Krugman.  Note that her effort at “fair[ness]” lasted exactly one clause.  You can condemn a study without having rerun the numbers if (a) the researcher gimmicked the inputs or (b) used a bogus model.  As I noted in my first column on this subject many of us would agree that the standard macro models are grossly unreliable.  But that is not what the Gang of 4 and Krugman are asserting, for Friedman used the same models that the five smearers embrace.

That leaves us with two sources of criticism.  Data entry and computational errors are one source, but there is no suggestion that the Gang of 4 and Krugman have done the analysis necessary to discover such errors.  They do not assert any such error.

The remaining source of criticism would be that Friedman gamed his inputs.  He could, for example, have put in a fiscal multiplier vastly larger than economists such as the Gang of 4 and Krugman believe exists.  That is not, however, their criticism.  It isn’t for two reasons.  First, several of the economists involved are not expert in the debate about proper multipliers.  Second, the economists involved that are most expert on multipliers have been arguing for years that the multipliers are substantial, and arguably larger than those that Friedman used in his study.

What an economist cannot do is what the Gang of 4 and Krugman have done:  I have no problem with your inputs, your model, or your math – but I hate your results so I’m going to abuse my status to smear and try to destroy you and the candidate I oppose.  Reread the journalist’s sentence that unintentionally condemns the Gang of 4 and Krugman:  “This was not because they reran the numbers, to be fair, but because they seem far-fetched.”  Focus on the second (vague) misuse of the word “they.”  You can complain about inputs on the basis that they “are” (not “seem”) “far-fetched” – i.e., contrary to the known facts about multipliers.  There is a critical difference between inputs to and outputs from a model.  You cannot dismiss a study just because the outputs “seem far-fetched” – and you certainly can’t smear the economist on the basis of your “priors” about what those outputs would be.  Your contrary priors, after all, have just been falsified by the model.  The phrase “seems far-fetched” is a statement of the Gang of 4 and Krugman’s “priors” – priors that were implicitly falsified by Friedman’s study.

The Gang of 4, Krugman, and the journalist love the meme that Friedman is so bad that he is like a Republican.  The journalist assumes that Friedman must have done something bizarre in his model, just like Republicans who game their models.  She contrasts Republicans with their honorable “New Democrat” opposites.

[Republicans] have insisted on “dynamic scoring,” measuring the budget impact of various pieces of legislation according to how much magic sparkling pixie dust they believe such pieces of legislation will bestow on the economy. They have put forward tax plans that do not — cannot — add up, and kept on insisting that they would. They have promised everyone no taxes, awesome jobs, and a pony — all for free.

Democrats, say what you will, have avoided doing this to anything like the same degree. They have admitted that tax cuts do not pay for themselves. They have recognized that government spending needs to be financed with budget cuts, revenue increases, or a jump in the deficit.

The journalist, in her effort to come to the Gang of 4 and Krugman’s aid, again ends up condemning them and revealing her ideological views and lack of understanding of economics.  First, the economy is in fact “dynamic” and changes in demand do have critical impacts on the economy.  The problem with “dynamic scoring” as practiced by Republicans is two-fold.  First it is asymmetric in ways that make no economic sense.  Tax reductions are modeled as increasing growth, but increased spending is not though both operate by increasing demand.  Second, they assume that tax reductions lead to large increases in hours worked that are far in excess of what the data show.  Note that both of these failures are deliberate modeling errors designed to support Republican ideological priors.

Here’s the problem – Friedman didn’t do any of these things or anything similar.  If he had, Romer would have spotted it and based the open letter on the “pixie dust.”

Second, the virtuous Democrats that the journalist described are also a major part of the problem.  “Democrats” have not “admitted” that increasing government spending must lead to “a jump in the deficit.”  That is the economically illiterate (according to both Krugman and Christine Romer) admission of the pro-austerity wing of the Democratic Party associated with the Clintons.  The reality, as Krugman and Romer (a member of the Gang of 4) have stressed, is that “government spending” increases, in many circumstances, will lead to an eventual reduction in deficits by spurring employment and growth, which increases government revenue and reduces many government expenditures.  Indeed, that is largely why the standard model that the Gang of 4 and Krugman embrace, without any “pixie dust,” produces the results that Friedman found.  The standard model shows that both the pro-austerity “New Democrats” that the journalist praises and the Republicans with their gamed “dynamic scoring” models that she scorns are wrong.  Bolder turns out to be much better.  The standard macro model, therefore, finds that Bernie’s plan will “have huge beneficial impacts” (to quote the Gang of 4).  (Also, the journalist and the New Democrats do not understand money, so the entire “needs to be financed” theory is wrong.)

The journalist and Krugman, of course, do not bother to reveal that many economists have reacted with horror to the Gang of 4 and Krugman’s efforts to smear Friedman (as a convenient way to smear Bernie).  I noted in my first column that Jamie Galbraith destroyed Krugman and the Gang of 4 in his column.

You can tell how desperate Krugman is by the rhetorical gambit he has chosen to rely on.  Recall that all of this began with a scathing, personalized and public attack on an economist by for the high crime of running competently and carefully a standard macro model and finding evidence that supported the economic plans of a candidate (Bernie) that he did not support.  The smear is bizarre and insanely over the top.  The assumption of journalists is – surely economists of this status would not perform a public lynching of this nature unless Friedman used “pixie dust.”  If he had done so the Gang of 4 and Krugman would have pointed that out in their open letter and Krugman’s three columns attacking Friedman.

Krugman’s rhetoric reveals that he has nothing beyond ever-escalating Trumpian insults – labeling Friedman’s use of the standard macro models (that Krugman endorses) “voodoo,” “horrifying,” “fuzzy math,” “embarrassing,” “outlandish,” and requiring a “miracle.”  None of the ad hominem remarks would have been required if Paul had found that Friedman actually committed “voodoo” by using the equivalent of a “magic asterisk.”   The Gang of 4’s effort would still obviously be political (a chance to bash Bernie) but at least it would have a clear economic basis.

Krugman exemplifies the old law joke.  “When I’m strong on the facts I pound the facts, when I’m strong on the law I pound the law, and when I’m weak on both I pound the table.”  He has decreed two revealing edicts complete with impassioned pounding.  First, no one is allowed to critique the Gang of 4 and Krugman’s smears of Friedman.  Prominent economists that do, such as Jamie Galbraith, simply do not exist in Krugmania.  This is understandable, of course, given Jamie’s evisceration of Paul and the Gang of 4, but it is still unprincipled.

But Krugman reaches a depth he has not publicly plumbed before in his second edict.  He tries to cast the people who launched the smear, the Gang of 4, as the victims of a smear because economists have had the temerity to point out their errors.  Krugman is enraged that people believe that the Gang of 4 wrote the letter as a means to attack a candidate they oppose – Bernie.  Given that the Gang of 4 openly did so and attacked Bernie for the work of an economist (Friedman) who supports Hillary, the entire world has figured out that the Gang of 4 and Krugman are seeking to defeat Bernie.

The curves of Krugman’s intellectual dishonesty, arrogance, and moral blindness, however, intersect at their respective maxima in this sentence.

Mr. Sanders really needs to crack down on his campaign’s instinct to lash out.

When you are the midst of your third writing in two days lashing out in an effort to smear an economist and a candidate you oppose, it takes a special form of hypocrisy and chutzpah to smear Sanders on the grounds that it is illegitimate for economists like Jamie Galbraith to successfully refute the Gang of 4 and Krugman’s smears of Friedman and Bernie.  Paul, we know you love your “pecking order” of economists, but no one is entitled to a free pass based on status.  The same rules apply to the Gang of 4 and you.  You have to bring logic and facts rather than a rolling barrage of ad hominem smears at those who use your own models and find that they predict the completely unsurprising result that bold plans like Bernie’s “have huge beneficial impacts.”

You, after all, made precisely this point about why the 2008 stimulus program should have been far larger.  Recall how the “freshwater” modelers responded to your point – they abused the results of your model’s predictions in rhetoric every bit as frenzied as you now hurl at Friedman and Bernie.  They at least believed your models were wrong.  Friedman’s unpardonable sin in your book is that he has emulated your work using your model and found as you did that much bolder is much better.  Paul, please complete the irony by predicting that Bernie’s plan will produce hyper-inflation – any day now.

18 Responses to Krugman Triples Down on His Smear of Friedman and Bernie

  1. Once again Bill Black tightens the coffin lid screws on the box surrounding the Gang of Four plus One. Let us hope that his wooden stake found the heart of the matter this time.

  2. The fundamental premise of Krugman’s critique of Friedman is that he has the bigger megaphone, a more elevated seat in the pantheon of economic gods, and the biggest (Nobel) economic prize; ergo his position shall prevail in the land of popular opinion. It is precisely the premise of a man motivated by vanity and false pride unfettered by intellectual or moral integrity. This ethically bankrupt premises has the unfortunate characteristic of being true. That said, it means a lot that men like you keep up the good fight.

    Jamie Galbraith, being a good Veblenite, and you, being a great champion determined to fight for principle alone, have slain the dragon for those of us with ears to hear, minds to think, and hearts to feel. I have circulated your columns among my friends and will write Krugman a nastily accurate email that he is certain to ignore.

    Best wishes,

    Michael B. Green, Ph.D.
    Clinical Psychologist
    Qualified Medical Examiner (1994-2006)
    Former Assistant Professor of Philosophy
    University of Texas, Austin

  3. So sad as I used to think Paul was the only bright light burning at the Times. Perhaps he’s seeing a presidential appointment is worth a trade off with his integrity?

  4. I wonder if Krugman is down on Bernie because he fears that Bernie might be easier to beat than Hillary in a general election. I don’t know if that’s true. But I do think that the possibility of a President Trump– or any of the Republican nominees as president– scares the daylights out of many people– and for good reason.

    • That may be Paul’s perception and motivation, but the polls show Bernie besting Hillary against all the Republicans. Perhaps Paul thinks every poll is sprinkled with pixie dust as well.

    • If someone is “down”–no excuse for a smear–then he or she might want to read “Inevitability or Electability? Sanders Reminds Voters He’s Most Likely To Trounce Trump” ( http://www.commondreams.org/news/2016/02/22/inevitability-or-electability-sanders-reminds-voters-hes-most-likely-trounce-trump ). The article includes the following:

      “Recent polling has shown Sanders outperforming his Democratic rival Hillary Clinton against all Republican contenders. When matched against Trump, the senator from Vermont is up 48 to 42 percent, which is a much wider margin than Clinton’s 44 to 43 percent lead on the GOP frontrunner.”

      The news might serve as an “upper.”

    • If Krugman believes that than this hypothetical strategy is about as wrongheaded as you can get. As an expert in economics, we expect honest analysis from him, and not to be told what we supposedly need to hear to do the things he thinks we need to do.

      After all, what can he do now that he’s dissed Sanders’ economic plans should Mrs. Clinton be elected, and should she decide to adopt some important part of Sanders’ plans. Can Krugman then turn around and support it and seem like anything other than a shill for Clinton?

      Far better that he just tells people what he thinks of the politics, and leave the lying about economics to others.

      I used to think Krugman was smart enough to know that, but now I’m not so sure…

  5. Every few weeks I’ve tried searching for Sanders’ economic advisers and I continue to come up empty-handed – although that’s what led me to this site. In 2008 I had the opportunity in NH to ask the candidates running then who were their economic advisers, and that for me was a critical factor determining who I would support. Sanders has mentioned Krugman and Stiglitz as those that he listens to but has been coy about who really does the spade work underlying his proposals. I still don’t have the answer.

    Much has been made of Krugman’s and the Gang of 4’s comments on Friedman’s work, but I think that the reaction to them has been over-the-top. Friedman’s analysis is a pretty mainline economic analysis, and his conclusions are based on the assumptions implicit in Sanders’ proposals. I don’t see the critiques as really hammering Friedman as much as they are concerned with the underlying assumptions. It’s quite clear from Friedman’s work that he understands what needs to be assumed to get the results and it’s also clear that he understands the limitations of those assumptions. What I think has been lost in the rhetoric is that Friedman is analyzing a plan that is not his and thus is required to bake into the cake some assumptions that I think push the boundaries of what is reasonable.

    And it’s easy enough to take things out of context to make a case that Krugman et al. are hammering Friedman. But you can do the same thing on the other side. For example, Galbraith’s letter notes that economic growth of 5.3% did occur under Reagan for a three year period, and he uses that to defend the assumption that economic growth can reach this level for an extended period of time. But he fails to note that this growth occurred after two recessions and a prior three year period where economic growth was virtually zero. Overall average? Right about our normal 2.5%. Is Galbraith’s comment misleading? If Krugman had made a point like that would you consider it misleading?

    I think there are two fundamental concerns. Galbraith’s comment that when you propose big changes to the economic system then you should expect big results is on target. But the question becomes whether you should expect big short-term changes in economic growth or big long-term changes in economic growth. I think the case for the former is strong but for the latter is suspect, and our standard macro models also aren’t really capable of giving good answers. (And a pet peeve is that everyone gives their point estimate for a forecast and not say a 95% confidence interval!)

    The second question is really implicit in Prof. Black’s post. If you’re going to analyze a macro model, it helps to have expertise in doing so. And if you’re proposing large changes in health care or macroeconomic stimulus or changing the financial system or … then you need to be talking with not one or two economists but with a collection of individuals with expertise in the relevant areas. So I return to my initial question. Who is Sanders consulting when he talks about breaking up the biggest banks or further revising the health care system or eliminating student loans? Focusing on the alleged spat between Krugman and Friedman is a trivial sideshow at best compared with an issue that should have a major impact on whether to support Sanders.

    • Dear Richard S.,
      Bernie Sanders hired Stephanie Kelton, Chair of the Economics Department at UMKC, as the chief economist for the minority for the Senate Budget Committee in December 2014. http://www.kansascity.com/news/business/article5168748.html
      I picked the low hanging fruit, anyone else have information on this topic?

    • Richard S.: Here is a list of Sander’s economic advisers on banking, from his senate site:

      Top Economists to Advise Sanders on Fed Reform

      • Thanks Atown and Calgacus. But I think there’s a potentially major difference between who is working in an official capacity for him for a Senate committee and who is working for or informally advising the campaign. Working on the taxpayer’s dime, like Professor Kelton, will make it problematic to officially advise him as a candidate for office. Those economists advising him on banking may be less constrained by senate rules, but they still banking experts rather than a group that spans a wide set of economic issues.

        • I didn’t know that Stephanie Kelton is constrained. It still seems likely that his current thinking is affected by her and her colleagues and others listed on his senate website, but who knows, Professor Black? He also appears to be someone who doesn’t have a whole lot of advice/ongoing research. He did evolve his Single Payer plan, but didn’t deliver a very well baked result when he chose to publish a statement before that debate. According to a brief Google session, Obama hired many of Hillary’s advisors after winning in 2008 because, well, those were the democrat party aligned thinkers who were available. She seems to have hundreds of advisors in every important policy category. Just how connected to heterodox economics is Bernie Sanders? Weirdly, the UMass prof who became newsworthy in relation to Sanders claims that he is voting for Hillary. UMass seems an obvious source of talent for Sanders.

    • Hi Richard S.,
      When asked who in an interview on 5/3/2015 who Sanders would appoint to his cabinet, Sanders named Robert Reich as his Treasury Secretary. See:
      https://www.youtube.com/watch?feature=player_embedded&v=dbtnheO61x0

      Having read two of Reich’s books (The Work of Nations and Trapped in the Cabinet), I think Reich would be an excellent choice, since he has shown that he can be circumspect when required, but still argue his points against the likes of Robert Rubin and Larry Summers. He worked very hard to convince Bill Clinton to raise the minimum wage, despite the objections of the other economists in the Clinton administration.

  6. The byline of this piece reads 2006. Might want to fix that 🙂

  7. Austin Goolsbee is now saying on Twitter that the model is wrong:

    “I like Bill Black & his great book on banks. But here, he defends a mistake–the model had no supply curve. it’s wrong”
    https://t.co/wtzoMxc9Hy

    • I am not an economist, but I invite someone who is to post to this thread answers to the following questions.

      1) Are there any occasions prior to this that Goolsby has exposed the standard model as defective? (If not, then his current inspiration may be reasonably inferred.) If so, when are the first and last such occasions?

      2) Between those two times, or before then if the first and last occasion are the same occasion, or before now if this is the only such occasion: when has Goolsby used the standard model in support of a conclusion that favors a policy he advocates?

      At least Goolsby, unlike Krugman, is on point regarding what might be amiss with Friedman’s analysis.