— Christopher Coyne (@ccoyne1) September 19, 2013
Don Boudreaux evaluates Tyler Cowen’s claim that Paul Krugman is his generation’s Milton Friedman, and argues that Krugman has not been as influential in the academic, policy, or public realm. While I agree with Boudreaux, for the most part, where he disagrees with Krugman — I consider myself a strong market-oriented economist —, I think he gets some of the details wrong in his analysis. While I must admit that, at first, I was skeptical of Cowen’s endorsement, ultimately there’s strong evidence that Krugman is, indeed, this generation’s Friedman. The biggest difference is that Krugman is a champion of a different ideology than Boudreaux, and as much as the latter tries to take ideology out of his assessment I think it still clouds his judgment.
Take, for instance, this statement,
Even if Krugman is correct in all that he says these days, he says mostly what the economically untutored and uninformed man-in-the-street already believes. Krugman, therefore, doesn’t change minds so much as he reinforces pre-existing beliefs.
But, there is no homogenous “man-on-the-street.” Economic ideas that resonate with libertarians are very popular amongst a large segment of society (and not just libertarians). They are just as much “men-on-the-street” as those who believe the minimum wage helps the poor. If Krugman is only reinforcing pre-existing beliefs, we could make the same argument about Milton Friedman. After all, there were many people who already agreed with his general worldview.
Given that there are many “men-on-the-street” that disagree with Krugman, the only reason why he would be “reinforcing pre-existing beliefs” would be caused by confirmation bias. Rather than speaking poorly of Krugman, this is more damaging to the “anti-Keynesian” “man-on-the-street.” Of course, anybody can disagree with Krugman, and doing so shouldn’t necessarily count as a mark against them, but plenty of people also disagree(d) with Milton Friedman.
In any case, the fact is that Paul Krugman has done a lot to correct “man-on-the-street” economics. The left aren’t the only ones capable of spewing bad applied theory; the right has done dirty work of their own. Krugman, for instance, is absolutely right to point out that the majority of the budget deficits of the Great Recession were/are cyclical: they represent dramatic declines in tax revenue, rather than dramatic increases in government spending. He’s also right that much of the Federal fiscal stimulus was counteracted by decreases in local government expenditure. In a world where the concept of inelastic money has gained wider support, Krugman has been right to champion currency elasticity (i.e. monetary disequilibrium; although I don’t necessarily agree with his more dramatic monetary policies).
Generally, Krugman has been good at keeping the debate honest. Sure, there’s plenty to disagree with in his writing, and Krugman is not always honest himself. But, the same — to some extent — can (and has) been said about Milton Friedman, whether we agree or disagree with the criticism. But, if the average young conservative and libertarian were to read Krugman, they would emerge a better economist and would enjoy a stronger understanding of the world. If Krugman has not been influential in that sense, it’s not his fault. People can be closed minded: again, confirmation bias. But, my guess is that he has been influential and that Boudreaux only underestimated Krugman’s impact on the public. (And, where there is reinforcement of pre-existing beliefs, Krugman has typically improved the rationales for these beliefs — something Friedman did, as well.)
What about on the academic side? Boudreaux makes two major claims,
- Krugman’s contributions are more narrow in scope than Friedman’s;
- Friedman’s contributions are more relevant towards public policy.
I don’t know all of either economist’s scientific contributions intimately, and I’m sure Boudreaux has an advantage over me in this department. But, based on what I do know, I’m not sure Boudreaux gets it right here, either.
Paul Krugman’s New Trade Theory was incredibly influential. It changed trade theory from a simple comparative advantage story to one that better fit the data. Maybe this contribution is narrow in scope, but it’s not more narrow than Milton Friedman’s permanent income hypothesis. Friedman was very influential in monetary policy, and his history of U.S. monetary history — especially of the Great Depression — has guided countercyclical monetary policy. But, Krugman has a contribution of his own in this department: the liquidity trap. Arguably, the liquidity trap has also been very influential, but this is something that will have to be tested over the coming decades. Also in this area, Krugman has contributed influential work on currency crises (critiquing manipulated fixed exchange rates). Many of Krugman’s contributions in the recent crisis, although not necessarily through academic venues (although, his papers on debt and deleveraging should be considered) are comparable to Friedman’s criticisms of a stationary inflation–employment tradeoff and his natural rate hypothesis; not comparable in substance necessarily, but comparable in perceived significance.
Perhaps someone can cite evidence of obviously misleading scientific contributions on Krugman’s part. But, he would have a counterpart in Friedman in that area, as well. It’s hard to think of a paper more disputed than Milton Friedman’s essay on positive economics. And, like Friedman’s work, Krugman’s will be (and have been) improved and fleshed out by subsequent researchers, confirming or tweaking the various subtleties.
This is starting to sound too much as a debate over who’s the better economist. That isn’t my intention. If you were to argue that Milton Friedman was the better one, I would probably agree with you — after all, I agree more with Friedman than I do with Krugman. But, it’s not over who’s better (not to mention that these types of comparisons tend to suffer from obvious biases — you have to assume that your worldview is the correct one); it’s about comparing influence. I just don’t find that the historical evidence supports Boudreaux’s contention that Krugman has not (a) improved “man-on-the-street” economics and that his scientific work has been (b) of a lesser scope than Friedman’s and (c) less influential and relevant. I think that this opinion is reflective of someone who hasn’t been influenced by Krugman (which is fine; I’ve been less influenced by Krugman than others have, as well), but I don’t think Boudreaux is representative of the average person.
Is Paul Krugman’s today’s Milton Friedman? There may be an argument that Friedman was more influential than Krugman. But, this argument would be difficult to validate, and in fact there’s a lot of evidence to the contrary. At the very least, it’s clear that Krugman’s influence approaches Friedman’s. This by itself says a lot about Krugman, because we have to remember that the communication outlets for economists have become more numerous and cheaper; Krugman has more intellectual competition than Friedman did. Thus, one should read Boudreaux’s assessment with a good dose of suspicion.
Update: Here is an example of the type of corrections of “man-of-the-street” economics Boudreaux has in mind, written by Paul Krugman: “Is Capitalism Too Productive,” Foreign Affairs 76, 5 (1997) — also available on JSTOR and PKArchive.org.