Economists tell tales.
The best are those that make it easier for us to understand very complicated ideas. Paul Krugman, a Nobel Laureate, wrote one such tale years ago, an essay called “Ricardo’s Difficult Idea.” It explains something economist David Ricardo discovered nearly 200 years ago: When nations trade they both become better off even when some people seem to suffer.
Since that essay Krugman has been telling tales for the New York Times. Not all have been as wholesome.
Krugman appears to be one of those court wizard economists who believe they — that is, the government — can fine-tune the economy. In his August 2, 2002 column he says that “[t]o fight this recession the Fed needs more than a snapback; it needs soaring household spending to offset moribund business investment. And to do that . . . Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble.”
Yes, back in 2002 Krugman supported the Fed’s super-low interest rates, and predicted the outcome: A housing bubble.
Which has burst.
Since then, Krugman’s readers have looked for someone to blame. Well, Krugman’s own words give us all we need to incriminate his own very self . . . and his fellow court wizards.
Familiar story: Self-aggrandizing experts aim to fix things, and put us all in a fix. The case against government management of the economy just got even stronger.
This is Common Sense. I’m Paul Jacob.