January 31, 2016
I have tremendous respect for Paul Krugman. I also consider him a friend. For these reasons I am not eager to pick a fight with him, but there is something about his criticisms of Bernie Sanders that really bothered me.
In a blog post last week, Krugman told readers:
“As far as I can tell, every serious progressive policy expert on either health care or financial reform who has weighed in on the primary seems to lean Hillary.”
While I already had some fun with the idea of Krugman revoking the credentials of everyone who works in these areas who does not back Clinton, the appeal to the authority of the “experts” is more than a bit annoying. The reason is that the “experts” do not have a very good track record of late and still have a long way to go to win back the public’s trust.
To start with the obvious, almost none of the experts saw the 2008 collapse coming. Almost all of them dismissed the idea that there was a housing bubble and even the few that grudgingly acknowledged the possibility of a bubble insisted that it could not have much consequence for the economy.
Given the devastation wreaked by the collapse of this bubble, this failure is comparable to weather forecasters missing Hurricane Katrina. Just to be clear, I don’t mean failing to recognize the full severity of the storm, I mean missing the hurricane altogether and forecasting nothing but blue skies for the day it hit. The public could be forgiven for not wanting to trust future forecasts.
The list goes on. The experts insisted that we would have a Second Great Depression if we didn’t bail out the Wall Street banks. Really? Was there some magical curse that would overcome the country if Goldman Sachs and Citigroup went out of business? Would Keynesian stimulus no longer work? We got out of the first Great Depression in 1941 by spending a ton of money fighting World War II. It is hard to see any reason why we couldn’t have ended the depression a decade sooner by spending a ton of money in 1931 on infrastructure, health care, and education. The same story would have applied in 2009.
Today most of the experts are telling us the economy is near full employment. To accept this view we have to believe that millions of prime age workers (between the ages of 25–54), just decided they don’t feel like working any more. The drop in labor force participation rates occurred at all education levels, including people with college and advance degrees. This massive loss of interest in working was completely unpredicted by the experts just a few years ago.
The experts have not done notably better on health care. We have seen a huge decline in the rate of health care cost growth. While this is a great development from an economic standpoint, it was completely unforeseen by the experts and still largely unexplained.
The experts even managed to get some of the basics of Obamacare wrong, falsely warning us about the importance of the “young invincibles,” convincing the public the that the success of the program somehow depended on the willingness of twenty somethings to sign up for insurance. As a simple analysis by the Kaiser Family Foundation showed, skewing by age makes little difference to the finances of the program. What matters is skewing by health condition. In other words, it matters much more for the finances of the program if healthy 60-year-olds sign up. There is no special importance to people being young.
Given their track record, the public has some cause for skepticism when being told that the experts all line up behind a particular candidate (which happens not to be true). It is certainly the case that Sanders’ proposals are campaign planks, not fully worked out programs. I will also be the first to say that I would be more than shocked if we managed to get a universal Medicare system in two terms of a Sanders administration.
But does Sanders agenda offer less prospect of moving the ball forward than Clinton’s? This is very much a political question, where one’s status as an expert on health care or finance may not be all that useful. I gave my answer last week. People may disagree, but they should at least understand the nature of the question.
One final point, many Sanders supporters seem to believe that Krugman is looking for a job in a Clinton administration. I am quite certain Krugman would turn down any job Clinton might offer. Krugman believes what he is writing, he just happens to be mistaken.
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