Man Without Qualities

Tuesday, December 31, 2002

FURTHER UPDATE: The Two Ivory Towers

Insightful reader AA points out that when Paul Krugman noted that "yes, the tax cut also made a marginal contribution" in the list of reasons for 2002's resumption of growth in the column discussed here, he was not conceding error:

You might have pointed out (as Krugman should have as the statement is too compressed for folks like you and Mickey) that the marginal effect of the "Bush tax cut" on the economy was due to its front loading of cuts to the regular folks. That part of the cut was a Democratic idea.

Maybe. I'm not sure what Professor Krugman was referring to when he wrote "yes, the tax cut also made a marginal contribution" - and I think the reader's not being able to know is often just the point with Professor Krugman. I don't think this represents compression - it's more like evasion.

What Professor Krugman wrote reads (at least to me, and, I think, Mickey) more like a concession that at least some aspects of Professor Krugman's prior positions on the tax cut were wrong than would, say, "and, yes, the part of the tax cut to ordinary folks which was championed by Democrats also made a marginal contribution - as hoped and expected here." That would have been just as easy to write and packs a lot more information than what actually appears in the column. But it's also easier to check against past and future facts - which Professor Krugman increasingly seems to want to avoid, in my opinion.

Even what at first seem to be his simple predictions on closer inspection often appear crafted to avoid subsequent identification as bad predictions if they go wrong, but to allow Professor Krugman to claim them as good predictions, if things go his way. For example, consider his statement in the same column that "Taxes, mainly taxes that fall most heavily on the poor and the middle class, will go up" - discussed by Jane Galt and here. At first this seems eminently verifiable against future facts: if states don't mostly use regressive taxes to fund their deficits, then his prediction is wrong.

But not so fast. The elegiac style and context of the assertion can also be read as expressing mere concern and anxiety on Professor Krugman's part that regressive taxes will go up. If regressive taxes don't rise, Professor Krugman can claim that his hopes were fulfilled - but his concern and the threat were both nevertheless very real.

All of which leaves open whether it is a bad thing that "regressive" taxes go up. For example, the BTU tax advocated by many Democrats would likely have been highly regressive - as is the federal gasoline tax. Is it a bad thing if such taxes cause energy users to internalize the costs they would otherwise impose on others through the environment? Many sensible and knowledgeable people also believe that there is a clear need for congestion pricing (i.e. tolls) on freeways - which would probably be regressive, but might benefit everyone and the environment overall. Is it clear that such tolls would be a bad thing? Does Professor Krugman think they would be bad things? He doesn't say - but he implies that a rise in regressive taxation would be bad regardless of its nature – a position most better economists would consider not to be thoughtful economics.

That's all fine for a partisan columnist, but the serious economist inside has quite clearly expired, if he really had a lot of life to begin with.

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