At some point, a leading figure in the conservative movement told John Hinderaker that he had a tremendous amount of economic knowledge which he should share with the world, and, in doing so, provide enlightenment and deep economic insights for his blog's readers.
Whoever said this to Mr. Hinderaker lied with impunity.
Remember, this is the same person who still believes that hyper-inflation is around the corner, the CRA led to the economic collapse and that the economy just hasn't grown at all in the last four years. I demonstrated the depth and degree of Hinderaker's economic incompetence and ignorance in this piece a few months ago.
Now Mr. Hinderaker is back with a piece titled, The Uncivil Mr. Krugman. Here's the money quote:
For the last year or two, Krugman has been campaigning in favor of
public debt. As a liberal, the end point of his ambitions is the
expansion of government, and Krugman has argued vociferously that
ballooning debts around the world should not constrain the relentless
march of big government. As part of that effort, he has viciously
attacked academic work by Harvard’s Carmen Reinhart and Kenneth Rogoff,
which shows that at a high level (90% of GDP), government debt impairs
economic growth. Reinhart and Rogoff have finally had enough, and on
Saturday they published an open letter to Krugman
Mr. Hinderaker: over the last few months, the 90% threshold has been shown to be non-existent. Mike Konczal over at the Next New Deal was the one who best summarized the work which exposed the fallacy of RR's claim. Since this data was published, there has been a fair amount of back and forth between RR on one side and Krugman/DeLong on the other debating the impact of RR's original work, with RR attempting to downplay their actual impact and rehabilitate their reputation while Krugman and others (most notably Brad DeLong) have shown that RR are at best being disingenuous regarding their attempted rehabilitation.
Over the weekend, Brad DeLong pretty much destroyed RR's attempt at a rebuttal to the debunking. For me, the money paragraph is here:
The third thing to note is how small the correlation [between high debt and lower growth] is. Suppose that we
consider a multiplier of 1.5 and a marginal tax share of 1/3. Suppose
the growth-depressing effect lasts for 10 years. Suppose that all of the
correlation is causation running from high debt to slower future
growth. And suppose that we boost government spending by 2% of GDP this
year in the first case. Output this year then goes up by 3% of GDP. Debt
goes up by 1% of GDP taking account of higher tax collections. This
higher debt then reduces growth by… wait for it… 0.006% points per year.
After 10 years GDP is lower than it would otherwise have been by 0.06%.
3% higher GDP this year and slower growth that leads to GDP lower by
0.06% in a decade. And this is supposed to be an argument against
expansionary fiscal policy right now?….
Also read this post from Robert's Stochastic Thoughts which thoroughly dismantles RR's open letter to Krugman.
But here's the real issue: like all issues economic, Mr. Hinderaker is a day late and a dollar short. First, the debunking of RR's 90% claim occurred over a month ago. Since the revelation that the paper's data was caused by an Excel coding error (very much a rookie mistake and something that if it had occurred in the economic left would have been touted by Powerline from all points on high), the entire austerity argument has come off the rails. While this occurred, there was not a peep from the political right on the topic -- and remarkably little from the economic right. In fact, in his post, Mr. Hinderaker obviously still believes the 90% line exists, when in fact it does not (see DeLong's post above). That shows just how behind the eight ball Mr. Hinderaker is regarding the current state of the austerity debate.
But more to the point: Krugman's analysis of the current economic scenario has been dead-on accurate for the last four years and Krugman's work on an economy at the 0% lower band has proven to be the best model for understanding and interpreting current macro-level economic events. Like him or not, there is no ignoring the fact that his analysis has been correct.
Mr. Hinderaker, on the other hand, has proven to be 100% wrong regarding his economic analysis. He still believes in hyper inflation, when the exact opposite is happening. He still claims there is no growth in the economy. He has yet to acknowledge that the stock market is making new highs or that housing is growing again. In short, if he took his own advice regarding economics, he'd probably lost money the last four years because his ineptitude is that severe.
So, please, Mr, Hinderaker: you're really embarrassing yourself now. The amount of economic ignorance you've displayed in your two most recent economic posts indicates that you're not competent to participate in an economic discussion. Please stop trying.