Man Without Qualities

Tuesday, December 24, 2002

Internalizing The Abuse

It is not a seasonal sentiment to hope that an "internal e-mail" from one disgruntled Princeton student or junior faculty member to another accuse Paul Krugman of including smears in his column to deliberately, illegally and successfully manipulate the price of a particular publicly traded security - and that the accusing e-mail carry only as much support for its smear as Professor Krugman generally requires of his own published accusations and self promotional claims. It would be particularly unseasonal to hope that the accusing e-mail also claim that Professor Krugman's alleged crimes be the product of a shadowy conspiracy. Perhaps the memo could include a bald assertion that the sender had personally heard Professor Krugman confess to such an intent.

And I don't wish such things on Professor Krugman - although the temptation is great. And the hideous experience of having to disentangle himself from the tar baby of an accusing memo might actually help concentrate his mind when he cobbles together his own insinuations.

Market behavior is hard to understand. Professor Krugman, for example, has argued or insinuated that the recent California electricity market run up was caused by market manipulation. But specialists have testified before the California legislature that "manipulative" activities Professor Krugman cited as important and pernicious in this regard (“Fatboy,� etc) could have moved the market by, perhaps, five percent. A recent federal regulatory decision found that California had been overcharged by only a small fraction of what California authorities or Professor Krugman had asserted. He congratulates himself anyway.

Accusations of market manipulation are not vindicated by internal e-mails, which aren't even very good evidence of intent, despite - often because of - their often intense confessional appearance. Instead, that's the kind of thing one calls in a real economist to help to evaluate. It took a long time for antitrust enforcement officials to learn not to take seriously executives bragging of their intent to effect market dominance. There exists an extensive serious economics literature on the topic and the pitfalls of memo-dependency. But lazy, intellectually dishonest and/or simple minded people latch onto e-mails, memos, bragging conversations and the like because such people think that evidence of that type spares them from having to do their economics homework.

But it doesn't.

Economists don't think in terms of internal memos. They have other, better, harder things to do. But not Professor Krugman - who takes this opportunity to praise Eliot Spitzer, fresh from Mr. Spitzer's broadside assault on markets and paens to government regulation and price controls. In a world such as Professor Krugman's, in which conspiracies and old boy networks (only of politically incorrect casts, of course) are the dominant considerations, such scraps of paper and deleted e-mail files are everything.

In this column, Professor Krugman also leaves many other undeserved gifts under his own tree. His suggestion that someone has disserved the World Trade Center victim families by treating them as uppity and insignificant peasants ("Villeins ye are, and villeins ye shall remain.") appears to have exceeded even the Times tolerance for his slanders - and the person allegedly doing the disserving is not even identified - the entire Krugmanian smear being attempted in the elliptic! (He writes: Americans received many promises of reform. But once the political danger had passed, all those promises - even, incredibly, the promise that families of victims would get to choose one member of the Sept. 11 commission - became non-operational.) But he is simply too tedious, too wrong, too vague and too insubstantial to spend the time at this time of year unpacking all of his silly, self promotional claims.

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