The latest issue of Agenda in which my paper in the previous post is published contains a symposium titled: Krugman on Economics in the Light of the Crisis. My colleagues Don Harding and Jan Libich have a piece there called: Froth and
Bubble: The Inconsistency of Paul Krugman’s Macroeconomic Analysis. Their summary reads: ‘ We have documented the changing state and consistency of Paul Krugman’s macroeconomic policy analysis. The contrast between his assessment of 2002/2003 and 2008/2009 is so large and the justification for the changed view so ephemeral that we feel his policy recommendations no longer have the required consistency and coherency. Rather than being the substance that nourishes public debate they seem to conceal the substance.’
I agree that Krugman does display inconsistencies but still think, nevertheless, that the criticisms Krugman makes of macroeconomics are correct. John Quiggin in this collection quips that economics indeed places much emphasis on logical consistency but that consistency is hardly a virtue when you always get it consistently wrong. I agree with Quiggin that real business cycle theory seems a particularly preposterous fantasy – Ed Prescott is alledged to have claimed that Obama caused the current US recession because zealously rational US workers anticipated higher taxes following the election of a socialist-Islamist!
Economist who push this drivel have lost the capacity to think. Their models have infected their brains with a virus that contaminates their core vision. (107)