We live in a time where lessons of the past have been unlearned and being right about events does not necessarily mean you will be vindicated, said Nobel Laureate and New York Times writer Paul Krugman in a Festival of Dangerous Ideas event at the Sydney Opera House last night.
Krugman’s talk was on how bad ideas in economics have taken hold and are difficult to shake, the reason being in his view because, as the economist John Stuart Mill said to Parliament in 1866, “although it is not true that all conservatives are stupid people, it is true that most stupid people are conservative.”
A refusal to admit errors
One of the notable aspects of today’s age of bad ideas is how those who proven wrong refuse to admit their errors with Krugman citing the 2010 public letter signed by 23 prominent academics, economists and money managers to Federal Reserve chairman Ben Bernanke warning Quantitative Easing would unleash inflation.
They were wrong but when 9 of the 23 signatories were interviewed by Bloomberg Business last year, not one of them would admit they were mistaken.
For Krugman, it seemed hard to hide his exasperation with these people as he explained, “If you took at all seriously what is taught in economic textbooks then where we are is not surprising” and pointed out anyone who had studied the Great Depression and Japan’s lost decades could see how events were going going to transpire.
Defeating half baked ideologies
What Krugman didn’t discuss during the session was how did we get to a state where many of our political, business and community leaders outright reject the lessons of history and established knowledge, preferring instead often half baked ideologies.
A half century ago, things were different. Ayn Rand’s first television interview with Mike Wallace in 1959 illustrates the prevailing mindset among America’s elites. Wallace is taken aback at Ayn Rand’s philosophy of the individual’s desires and needs above all.
For Wallace’s generation that had been through the Great Depression and World War II, the importance of collective effort in an industrial society were well understood. In just over a decade, the US would successfully put a man on the moon and the rise of Silicon Valley and today’s tech industry were results of that effort.
Today it’s hard to see that sort of communal effort in the face of self interest and wilful, if often profitable, ignorance. For Krugman, his advice for those wanting to push back against this prevailing attitude is not to be too polite and keep in mind that satire and sarcasm are necessities in today’s world.
Being an informed citizen
For those pushing back, facts and research are critical, and Krugman advised one of the audience questioners who was despairing about the quality of information available in the media that the ability to be an informed citizen is greater than ever before.
Krugman’s talk covered many of the Bad Ideas that have got our economy and institutions to where they are today, the challenge for today’s generations is to overcome the narrow, half baked ideologies that dominate today’s policymaking.
In a festival that, despite its name, is notable for a lack of truly dangerous ideas, perhaps suggesting those Good Ideas for the next generation would truly be the antidote for the last thirty year’s lazy and shallow thinking.
Paul attended the Festival of Dangerous Ideas as a guest of Intel Australia.
Image of Paul Krugman byEd Ritger/The Commonwealth Club of California via Flickr
Top trolling Paul!
Krugman, as always, doesn’t let a good fact get in the way of the narrative.
Yes, there were some people who thought money-printing would cause a new Weimar Republic. There were also some folk who thought it would stimulate growth (Krugman, for example).
Both were wrong.
Both Krugman and Bernanke love to use the Great Depression as a cautionary tale of central banks not intervening fast or hard enough.
I have yet to hear or read either one take a question on the lesson the 1920/21 depression teaches us about letting banks reap the full consequences of their bad bets.
It’s all academic, of course, as we are living in a post-capitalist economy now as a result of this Keynsian rubbish.
Keynes was a self-confessed kiddy-fiddler, by the way. Just apropos of nothing.
Once again Krugman cherry picking. Yes there were those on the other side predicting hyperinflation who were dead wrong, but Krugman himself didn’t say there would be no hyperinflation. Rather he wrote numerous columns predicting a major deflation which also never happened. So he calls out the other side but is totally silent on his own mistake.
Krugman also argued in early 2009 that the only way out of the crisis was a nationalization of major American banks because they were almost certainly going to lose hundreds of billions of dollars over the next several years. Two weeks later Citi and BofA posted surprise profits and within 18 months Krugman was writing columns attacking the big banks for being too profitable.
Krugman also accused Germany of refusing more and bigger Keynesian stimulus in late 2008 (calling Finance Minister Steinbrueck “boneheaded”) and cited a report predicting Germany would have its worse crisis since the 1940’s. Well if a year later he could define lowest unemployment rate in 20 years and every PIIGS country that did deficit spend itself into real crisis lining up at Merkel’s doorstep for bailouts as a German crisis then I guess that’s one he sort of got right.
I could list dozens more mistakes he made and attempts to whitewash them with “well the inflation target wasn’t high enough” or “the stimulus package wasn’t big enough” but Kruggies are just like Krugman. They don’t care and continue to parrot his errors for tiem eternal.