Niall Ferguson: Krugtron the Invincible, Part 1

This also reminded me of something Charlie Munger said at the Daily Journal Annual Meeting this year when asked about QE and government involvement in the economy: 

“Well, you just asked one of the most complicated and interesting questions and one of the most important questions in the whole world. Of course, nobody knows the answer -- just when too much is too much. We know you can't just start printing money to run the whole economy and stopping taxation. At some point on that road, you get a backlash, which causes anguish you don't want to get to. But how far you can go in having these Keynesian benefits and get by with it without risking that backlash, nobody knows for sure.If you're like me, I believe in giving big trouble a wide berth, so I would try and stop a little short on this. Solving my problems by printing money.

Somebody like Paul Krugman, who's overdosed on mathematics, and uses the king's English better than practically anybody alive, so he's very dangerous. He just thinks there's no limit to the amount of -- he wouldn't say that, but he thinks the limit is so faraway you don't need to worry about it at all. That is not my view. But nobody knows the answer to that.”

It's an ill wind that blows no one any good. The financial crisis that came to a head five years ago with the failure of Lehman Brothers has been especially beneficial to the economist Paul Krugman. In his widely read New York Times column and blog, Krugman regularly boasts that he has been "right" about the crisis and its consequences. "I (and those of like mind)," he wrote in June last year, "have been right about everything." Those who dare to disagree with him -- myself included -- he denounces as members of the "Always-Wrong Club." Readers of his blog have just been treated to another such sneer.

"Maybe I actually am right," Krugman wrote back in April, "and maybe the other side actually does contain a remarkable number of knaves and fools. ... Look at the results: again and again, people on the opposite side prove to have used bad logic, bad data, the wrong historical analogies, or all of the above. I'm Krugtron the Invincible!" That last allusion is to the 1980s science fiction superhero, Voltron. The resemblance between Krugman and Voltron was suggested by one of the gaggle of bloggers who are to Krugman what Egyptian plovers are to crocodiles. Yesterday one of these thought, wrongly, that he had caught me out. Unwisely, the crocodile snapped its jaws shut.

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Let us leave -- for the moment -- the question of the future size of the federal debt, which I have dealt with elsewhere and shall return to in a subsequent article. My purpose here is simply to challenge Krugman's right to behave in this way. Even if he were nearly always right, there would be no justification for his lack of civility. But he is not nearly always right. There is therefore no justification for his unshakeable certainty either.

Krugman reserves a special contempt for people who, in his words, "take a position and refuse to alter that position no matter how strongly the evidence refutes it, who continue to insist that they have The Truth despite being wrong again and again." He calls this "derping." The awkward thing for Krugman is that "being wrong again and again" perfectly characterizes his own commentary on what proved to be one of the crucial issues of the financial crisis: whether or not Europe's monetary union would survive it.