Newsweek's Fearful Krugman Profile

Evan Thomas has a profile of Paul Krugman on the cover of Newsweek. The 2,825-word article has six on-the-record quotes about Krugman; none of them -- not even the one from his mother -- are particularly flattering. No one is quoted saying a single nice thing about Krugman's economics or his opinions.

When it comes to the substance of what Krugman produces, rather than his personality, the only two quotes come from Daniel Klein of George Mason ("a lot of what he says is wrong") and Dan Okrent, the former NYT ombudsman with whom Krugman had a bruising encounter. ("When someone challenged Krugman on the facts, he tended to question the motivation and ignore the substance.")

The other on-the-record quotes in the article are hardly any nicer: Sean Wilentz says that Krugman "doesn't like to be f--ked with"; Gene Grossman says that Krugman's academic career is over. Meanwhile, Thomas himself speculates that Krugman is "a little wounded" by the fact that the White House isn't showering him with attention; says that Krugman "sometimes gets his facts wrong" when he writes about subjects other than economics; and asserts that Krugman was so keen to win the Nobel Prize that he almost turned down his position at the NYT for fear of becoming "a mere popularizer".

All in all, the story is not exactly what you'd expect from a cover emblazoned with the words "Obama is Wrong" and the caption "The Loyal Opposition of Paul Krugman". Newsweek's editor, Jon Meacham, has an interesting take on the article:

Is Krugman right? Is the Obama administration too beholden to Wall Street and to the status quo, trying to save a system that is beyond salvation? Does Obama have--despite the brayings of the right--too much faith in the markets at a time when prudence suggests that they cannot rescue themselves? We do not know yet, and will not for a while to come. But as Evan--hardly a rabble-rousing lefty--writes, a lot of people have a "creeping feeling" that the Cassandra from Princeton may just be right. After all, the original Cassandra was.

I suspect that the final product is the result of overcompensating for the fact that Thomas and Meacham have just such a feeling: they're fearful that Krugman might be right, and have therefore come up with a list of reasons why it might be reasonable to ignore him.

And this, at heart, is why I think we haven't yet seen the worst of this crisis, neither in terms of the financial markets nor of the broader economy. There's still a sense of denial in the air -- a feeling that if you're going to devote an entire cover story to someone like Krugman, then the story should bend over backwards to showcase people saying that he's wrong, while it need make no such effort to quote anybody saying that he's right.

Or, to put it another way, the question posed by the article isn't whether Krugman is right or wrong -- it's whether he's worth listening to or not. And the answer posed by the article is "we fear he might be, but we hope he isn't". The problem -- which the article doesn't mention -- is that the history of this economic crisis to date is a history of fear being right and hope being wrong.

Comments

[Roger Knights]

"There's still a sense of denial in the air ..."

Despite the depth of the drop, we're still only halfway to capitulation.

2009 Mar 30 09:04 AM

[I need more cowbell]

Krugman is an extemely biased political hack, has been for years. This taints his opinions. However, who can we point to that doesn't have some level of bias?
Myself, I would like to see a lot more attention paid to the opinions of the captains of industry ( the ones who ran a good ship, produced good products, instead of worrying about quarter to quarter results- hmm, who are they? ), people not in the silos of academia, but have walked the walk and actually produced something. Not to the exclusion of economists, but it seems like they have too big of a microphone.

2009 Mar 30 11:56 AM

[j_remington]

Patience and cash are king.

2009 Mar 30 12:44 PM

[mrmillergd]

I read this piece as well as the recent one by Simon Johnson. Despite the fact that Krugman has always been harsh on Obama, especially in the early going relative to Hillary, I think there is an air of truth to his words. I don't agree with his Keynesian viewpoints but both he and Johnson are right that the Obam-ites are too close to the banking industry to really be able to an honest appraisal of what its ills are.

2009 Mar 30 01:20 PM

[CautiousInvestor]

On the one side Krugman and Stiglitz are calling for nationalization of the banks.................... on the other side the neocons are maintaining that the present course is a movement towards socialism.

And while we face a horribly difficult set of problems, Treasury and the administration done themselves no favors by dealing with the problems as they have. Taking TARP first, Paulson presented as a plan as a means of ridding bank balance sheets of toxic assets; hours later it was use to inject liquidity into banks through purchases of preferred shares. Then we had the sale of Merrill Lynch; the sale of Bear Stearns; the collapse of Lehman Browthers; and the takeover and sale of Washington Mutual.

Without explanation of policy rational, citizens are left to wonder what goals and interests were served in each instance and whether there are overarching policy guidelines to shape decisions as they arise. Some of these initiatives may served our interests but no one has explained this to be the case. Cleary, the banks benefitted.

More recently, many elements of the stress test were delayed for public release and results of the stress tests will be kept confidential. And the plan to purchase legacy assets is already being questioned because of the possible inadequacy of its scale and the very real possibility that bids will not clear because the banks will not sell at prices that would force material writedowns.

The administration, beyond noting additional funds may be required to support PPIP purchases, is not saying anything. Given that many doubt its adequacy, this only fosters doubt and uncertainty and breeds suspicion. Like what are they hiding from us.

As Simon Johnson noted, "the root problem is uncertainty—in our case, uncertainty about whether the major banks have sufficient assets to cover their liabilities. Half measures combined with wishful thinking and a wait-and-see attitude cannot overcome this uncertainty. And the longer the response takes, the longer the uncertainty will stymie the flow of credit, sap consumer confidence, and cripple the economy—ultimately making the problem much harder to solve. Yet the principal characteristics of the government’s response to the financial crisis have been delay, lack of transparency, and an unwillingness to upset the financial sector."

Beneath this veneer of lack of candor is the suspicion that bank balance sheets are far worse off than we have been left to believe, provide fertile ground for Krugman and others to discredit administration policy and raise legitimate concerns as to both the design and adequacy of our policy response.

2009 Mar 30 01:30 PM

[Mark Bern]

I'm sorry, but I just don't buy the "too big to fail" concept, especially in a free market, capitalist economy. Yes, there would be pain if large institutions failed. But a managed process, whether called bankruptcy or whatever, would be far preferable to the huge bailouts we are experiencing. I have a sense that the majority of Americans may agree that the government is spending away our future and saddling our children with burdensome debt (and the future tax increases that will be necessary toservice that debt).

But We The People do not have highly connected lobbyists walking the halls of Congress and the Administration explaining our views. So, we are not heard for now. Our elected officials will only start to "listen" about a year from now when the mid-term elections start to heat up. They will say what they need to say to appease enough of us to get themselves reelected. Those who pay the lobbyists will fund their campaigns. And when the dust settles after the election, they will once again turn to the sources of their success and listen to their views. And who are the sources of their success? Hint: It's not the average "Joe the Plumber".

2009 Mar 30 08:50 PM