It is often sadly remarked that the bad economists present their errors to the public better than the good economists present their truths. It is often complained that demagogues can be more plausible in putting forward economic nonsense from the platform than the honest men who try to show what is wrong with it. But the basic reason for this ought not to be mysterious. The reason is that the demagogues and bad economists are presenting half-truths. They are speaking only of the immediate effect of a proposed policy or its effect upon a single group.
Paul Krugman is one who can always be counted on to provide demonstration of Hazlitt's explanation of the success of bad economists. Here's a good example of a half-truth from Krugman's blog:
http://krugman.blogs.nytimes.com/2014/09/05/simply-unacceptable/
Simply Unacceptable
Chris Dillow makes a good point about economics and maybe public affairs in general: There is often a tendency to go for simple stories that aren’t true –as H.L. Mencken said, “For every complex problem there is an answer that is clear, simple, and wrong.” But it also often happens that the answer is simple, but people refuse to accept that simple answer. That is, the reverse of Mencken’s proposition also applies: For every simple problem there is an answer that is murky, complex, and wrong.
Dillow uses stock-picking as an example; I find myself thinking (surprise) about macroeconomics. Why is output so low and jobs so scarce? The simple answer is inadequate demand — and every piece of evidence we have is consistent with that answer. But Very Serious People pretty much refuse to accept that simple answer; it must be a workforce with the wrong skills (so where are the premium wages for workers with the right skills?), geographic mismatch (where are the states with booming wages?), and so on. It must, they insist, be a difficult problem with no easy answers — when everything says that “spend more” is the answer, full stop.
A lot of this is political — demand-side stories are inconvenient for those who want to use the slump as an excuse to dismantle social protections etc. But I don’t think that’s all of it; there is a deep desire on the part of people who want to sound serious to believe that big problems must have deep roots, and require many hours of solemn deliberation by bipartisan panels.
So how do you know whether public discourse on an issue is ignoring the complexities or introducing gratuitous complexity? Do your homework! It’s really that simple.
These sentences from Krugman's blog post illustrate how sloppy his thinking typically is, and why he's so popular with the public --
Why is output so low and jobs so scarce? The simple answer is inadequate demand — and every piece of evidence we have is consistent with that answer.Notice that this is a tautology -- it's obviously true, and it explains nothing.
Why? Because 'inadequate demand' and 'low output', are the same thing.
That is, demand is the spending of output. The only way to increase demand, is to increase output, since your productivity (i.e. your output) is your demand. Obviously, you have no demand, if you have not produced something you can offer in trade, so the only way to increase demand is to increase productivity.
As a faithful Keynesian, Krugman repeats this 'demand is the answer to everything' nonsense over and over again -- but he's just reversing cause and effect with this claim, since demand is the result of production, and not the reverse.
Saying 'output is low and jobs are scare because of inadequate demand', is the same as saying 'productivity is low because of inadequate productivity'.
Brilliant.
See Milton Friedman for a better source of economic insight --
http://maxautonomy.blogspot.com/2014/05/milton-friedman-addressing-some-popular.html
When will Krugman do his homework?
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