Wednesday, April 24, 2013

Why Has Paul Krugman Made Better Economic Predictions Than Austerians?

Noah Smith has a wry sense of humor.  In this post he portrays Krugman as a cartoon character who has slain all of his various opponents.  They keep predicting inflation and high interest rates in the US.  He tells that that they are wrong, and they have been consistently wrong.  Krugman claims that his secret weapon is a simple Keynesian model of the economy.  Noah Smith argues that he could not have defeated the austerians by only using that weapon.  Smith believes that Krugman understands what has happened in Japan and that he is using Japan as his model.

The bottom line is that Krugman has done a much better job of predicting what will happen in the economy than the Anti-Keynesian's.  One wonders why the Anti-Keynesian's stick to their bad predictions even when they continue to lose their bets.  It may simply be a difference in philosophy.  Some people just hate government intervention in the economy.  They expect that whenever government attempts to fix something it will be broken.  Its also possible that herd behavior is at work.  I was touting Krugman to one of my friends and he was not interested in Krugman's predictions.  Most of his friends hate Krugman, and he said that anyone who is so widely despised must be wrong.


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