by Jon Sanders
Research Editor and Senior Fellow, Regulatory Studies, John Locke Foundation
It doesn’t take a Paul Krugman to know when Paul Krugman is mistaken. One item in which Krugman has been mistaken [edited to add: but not always!] is the link between generous unemployment benefits and lingering unemployment, as has been discussed here before.
As economist D.W. McKenzie explained, the disagreement is between the free-market economists’ view that
most people will react to money incentives rationally. Increased unemployment benefits weaken incentives to find work. Harsh rules and taxes will cause entrepreneurs to hesitate in hiring new employees.
and Krugman’s notion that
economists on my side of this debate are misguided and hard-hearted. Supposedly, we want to reduce worker incomes with wage reductions and benefit cuts, and this will backfire by “reducing aggregate demand.”
In case you think McKenzie is being too glib in characterizing Krugman’s idea as essentially a personal attack — which would mean Krugman also disagrees with Krugman on the propriety of ad hominem attacks — here is Krugman today discussing North Carolina’s unemployment insurance reform.
UI reform was necessary, as John Hood wrote earlier this year, not only to pay off the state’s $2.5 billion debt to the federal government, but also because the extended-benefits system was responsible for keeping an estimated 40,000 North Carolinians from finding employment. Furthermore, as Carolina Journal reported, businesses in North Carolina have complained that the surcharges added to their unemployment insurance bill by the federal government to help retire the state’s debt have been preventing them from creating jobs.
In short, the case for UI reform primarily is to expand employment and employment opportunities. How does Krugman characterize it?
As you see, Krugman’s case is that North Carolina’s UI reform was motivated not just by “cruelty,” but also by … “meanspiritedness.” That’s the sort of hard-hitting, by-the-numbers economic analysis one can find only in The New York Times — as if the reform side was the policy equivalent of the bar in “The Blues Brothers” offering “both kinds” of music, country and western! (Krugman did approach debate with this sentence: “While cutting unemployment benefits will make the unemployed even more desperate, it will do nothing to create more jobs — which means that even if some of those currently unemployed do manage to find work, they will do so only by taking jobs away from those currently employed.” Rather than forming the basis of his column, however, it was a rare lapse into reasoned discussion amid his torrent of illogical blasts.)
Of course, Krugman’s choice to depict important and much-debated policy matters, upon which well-intentioned individuals differ on the means but not the goals, as a case of the “rational” vs. the cartoonishly evil probably makes it easier for the credulous reader to achieve Krugman’s policy goal — “be angry.”
Nevertheless, the side of the self-congratulated “rational” isn’t well served by resorting to straw men (such as in examples 1 and 2), argument ex terrori (4, 5, 6, 7, 9, 10, and 13), argument ad misericordiam (8 and 11), and argument ex detestari (3 and 12). Especially when the other side is arguing in facts and numbers, costs and benefits.
Nota bene: I declined to cite several instances of Krugman engaging in argument ex nihilo as well as several other examples of Krugman straw-manning, lest I run afoul of Fair Use guidelines.